The global exchange-traded fund (ETF) market closed in on US$10 trillion in assets under management during August as year-to-date net flows tipped above the total for the whole of 2020.
According to data released last week by researcher ETFGI, net flows into ETFs (including exchange-traded products – or ETPs) over 2021 to the end of August peeked above US$834 billion with more than US$94 billion gushing in last month alone.
ETFGI says the 2021 net flows to August were almost double compared to the same period last year “and higher than the full year 2020 record net inflows US$762.77 Bn”.
“Assets invested in the global ETFs/ETPs industry have increased by 2.8% from US$9.46 trillion at the end of July 2021, to US$9.73 trillion at the end of August,” the researcher says.
As at the end of August, the global ETF industry reported over 9,300 products from 568 providers listed on 78 exchanges in 62 countries.
While the US has been the epicentre of ETF growth, the product craze has taken off in most parts of the world including Australia and NZ where flows have accelerated of late.
Last week, for instance, Australian ETF provider, BetaShares reached A$20 billion in assets under management just 18 months after hitting the A$10 billion mark. Meanwhile, the NZX-owned Smartshares ETF suite reported almost NZ$5.4 billion under management at the end of August, representing a year-on-year increase of about 42 per cent. Roughly half of Smartshares ETF money now comes from external investors with the remainder sourced from in-house SuperLife funds.
BetaShares recently opened an office in Auckland, hiring former Smartshares head of institutional sales, Thom Bentley, to lead the charge this side of the Tasman.
Globally, US equity passive products dominated ETF flows (as usual) with broad market index-trackers offered by State Street and Vanguard accruing about US$16.5 billion between them in just three products. The SPDR S&P 500 ETF reported the highest net single-product net flow in August of US$7.8 billion followed by two Vanguard funds: an S&P 500 variant (US$4.5 billion) and the Total Stock Market ETF (US$4.2 billion).
“Substantial inflows can be attributed to the top 20 ETFs by net new assets, which collectively gathered $40.58 Bn [of the global US$94 billion plus] during August,” ETFGI says.
But while passive index-tracking products remain the go-to listed fund strategy, the research house notes active ETFs continue to gain support.
“Active ETFs/ETPs reported [US]$6.99 Bn in net inflows, bringing net inflows for 2021 to [US]$95.22 Bn, higher than the [US]$43.04 Bn in net inflows active products had attracted YTD in 2020,” the ETFGI report says.
The success of the Cathie Wood-headed Ark Invest active ETFs over the last 18 months in particular has seen a raft of other managers enter the product race, including two large brands – Capital Group and Federated Hermes – last month.
Deborah Fuhr, ETFGI founder, told media: “The shift by investors from actively managed funds into ETFs which began in the US has been spreading into every corner of financial markets since the end of the 2007/08 global financial crisis. Active managers know that competition from ETFs is intensifying everywhere and they have to respond.”
The global ETF market has grown from just US$426 billion and 483 funds in 2005 to the respective US$9.73 trillion and 9,302 products at the end of August, according to ETFGI figures.