ETF Demand Continues In Record Fashion

Drew Voros Editor-in-Chief

The record, red-hot start for ETF demand in 2017 continued last week as nearly $18 billion more in new assets were added to U.S.-listed ETFs, pushing the year-to-date total near $70 billion, a record start for ETFs in a new year.

Unsurprisingly, the majority of the new money went into U.S. equity ETFs, which had net creations of $10.5 billion. The S&P 500 climbed 1.5% week-over-week, and is now up 5.2% for 2017 as a whole.

The record flow of new assets as well as stocks continuing to march to new highs pushed total assets in U.S.-listed ETFs to $2.735 trillion. Here is the asset class breakdown:

Despite last week's broad-based ETF buying, one ETF to see sizable outflows was the SPDR Dow Jones Industrial Average ETF (DIA). Its redemptions of $2 billion sent its total assets under management down by more than 10%. Still, year-to-date flows for DIA are in positive territory, to the tune of $530 million.

Marijuana ETF Proposed

ETF Managers Group outlines plans for the firm to launch an ETF that will target the medical marijuana and industrial hemp industries. The Emerging AgroSphere ETF is currently set to become the first of its kind as there have been no other similar ETF filings.

The prospectus indicates that the fund’s underlying index will track companies that engage in research on cannabidiol CBD and cannabis derivatives and synthetics for use in prescription drugs and in companies that produce or sell derivatives of industrial hemp. The index can also include companies that are involved in the supply chains of the two previously mentioned types of companies. Companies can be selected from U.S. and foreign markets but must meet size and liquidity requirements and be listed in a market that meets investability requirements.

4 ETFs Close

OppenheimerFunds and PIMCO have announced that they will be shutting down a combined total of four funds in March.

PIMCO has announced that it will be shutting down two of its actively managed ETFs, both of which have substantial assets. The PIMCO Diversified Income Active ETF (DI) and the PIMCO Global Advantage Inflation-Linked Bond Active ETF (ILB) will both see their last day of trading on March 31. The funds have $43 million and $80 million in assets under management, respectively. A source at PIMCO says that the firm simply did not see “sufficient growth potential” in the two funds.

OppenheimerFunds is set to close two of the revenue-weighted ETFs it acquired with its purchase of RevenueShares. The Oppenheimer Global Growth Revenue ETF (RGRO) and the Oppenheimer ADR Revenue ETF (RTR) will see their last days of trading on March 9; neither fund had acquired much in the way of assets, less than $3 million for RGRO and less than $14 million for RTR.

Morgan Stanley Fined

Morgan Stanley has agreed to pay $8 million to settle SEC charges related to single inverse exchange-traded fund investments that the firm had recommended to clients. Over longer periods of time, the funds' performances often differ dramatically from the indexes they track.

"Morgan Stanley solicited clients to purchase single inverse ETFs in retirement and other accounts, the securities were held long term, and many of the clients experienced losses," the SEC said.

Regulators have previously penalized companies, including Morgan Stanley, for selling the funds without what it said were properly disclosing the risks or for not considering the appropriateness of the products for clients.

Drew Voros can be reached at

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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