Cinthia Murphy, Managing Editor, ETF.com
Investor confidence in the ETF structure as a way to access markets seems strong as ever this year despite volatile market action.
In March, when the U.S. stock market took its deepest dive since 2008, U.S.-listed ETFs ended the month with positive net asset inflows. In April, as the market rallied sharply off March lows, investors poured nearly $50 billion in fresh net money into ETFs.
So far, 2020 has been one of unprecedented market turmoil, yet ETFs have seen net creations of more than $121 billion year to date, far more than the $79.7 billion seen during this four-month period last year.
Asset Classes (Year-to-Date)
Outside of leveraged and inverse strategies, which have had quite a year amid the market’s heightened volatility, commodity ETFs have seen total assets under management of just almost 22% in 2020, thanks largely to demand for access to two commodities: gold and oil.
Among the year’s biggest ETF creations are the SPDR Gold Trust (GLD) and the United States Oil Fund LP (USO), taking in a net of $8.6 billion and $6.5 billion, respectively, year to date. In April alone, these two ETFs were among the top three most bought funds—gold hitting seven-year highs on inflation fears; oil tanking below zero on a supply glut.
Another segment attracting significant assets is U.S. fixed income ETFs, which in April along picked up another $20 billion in net new money. Buoyed by Federal Reserve buying in both sovereign bonds and corporate credits, demand for fixed income ETFs has been strong, led in April by net inflows of $4.2 billion to the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD).
On the flip side, international equity ETFs faced net redemptions of nearly $10 billion in April, bringing year to date flows totals to -$8.4 billion for the asset class. Driving the redemptions are concerns that economic recovery from the pandemic may be slower outside the U.S. in developed and emerging markets.
Some of the biggest asset bleeders in this segment include the iShares MSCI EAFE ETF (EFA) and the iShares Core MSCI Emerging Markets ETF (IEMG).
More on ETF.com:
ETF Working Lunch: Making Sense Of Commodities Investing
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.