U.S.-listed exchange traded funds continued to attract greater inflows as overall market conditions kept improving in the first quarter. Within the ETF space, investors are showing a growing preference for low-cost products.
In March, U.S. ETFs attracted $13.7 billion in new assets, with U.S.-stock ETFs bringing in the lion’s share of $7.7 billion, writes Abe Bailin, ETF analyst, in a Morningstar research note. Additionally, all asset classes experienced positive flows for the third straight month. [ETF Performance Report: Best First Quarter in Over a Decade]
Year-to-date, diversified emerging market funds saw the highest inflows, adding $10.5 billion, followed by high-yield bonds with $6.8 billion. In contrast, investors have shied away from developed market equities, with foreign large-blend ETFs experiencing $750 million in outflows. [Global ETFs Gather Record Q1 Inflows]
iShares, the largest fund provider with $500 billion in assets, lost $1.4 billion in March. Over the last year, iShares’ market share has diminished by 2.2% of total ETF assets to 41.3%. Meanwhile, State Street Global Advisors and Vanguard both added $5 billion over the same month. Year-to-date, Vanguard is leading the pack with $16.6 billion in new assets, followed by iShares with $12.8 billion.
The three providers have been slashing expense ratios on a number of their ETF products. Vanguard is especially known as providing some of the cheapest ETFs. While the company contends that they are reducing fees because of economies of scale, observers are quick to call it a price war. [ETF Price Wars: Round 2]
For more information on ETF flows, visit our ETF performance reports category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.