Analysis of exchange traded fund buying patterns at Charles Schwab the past two years shows the lion’s share of the inflows to ETFs were the result of investors putting to cash to work in the markets. Only a fraction of the money came from mutual funds.
Some clients are “getting off the sidelines” and back into the market with ETFs, said Beth Flynn, VP of ETF platform management at Schwab, in a recent call with reporters.
In a study based on money flows from its direct brokerage and registered investment advisor custody clients, Schwab said that the majority of new fund flows into ETFs is coming from cash. The study shows that 72% of retail investor dollars and 96% of registered investment advisor dollars that went into ETFs came from cash holdings.
“We think that’s a good thing. People are getting back into the market, and ETFs are providing that access and that exposure,” Flynn said in an Ignites report. [Exodus from Stock Mutual Funds Continues; ETFs See Inflows]
Around 15% of new assets from retail investor clients that went into ETFs came from mutual funds, whereas more money moved out of ETFs and into mutual funds on the advisor side. [ETF Buying Softens Fund Outflows]