Fueled by the ongoing risk-on environment amidst the so-called Trump rally, exchange traded funds attracted new assets at their fastest pace of any year on record.
Global investors funneled $62.9 billion into ETFs in February, bringing the total to $124 billion in net inflows to ETFs year-to-date, the best start of any year in the history of the ETF industry, reports Asjylyn Loder for the Wall Street Journal.
U.S. ETFs made up $44 billion of the new inflows, bringing assets in U.S. funds to almost $2.8 trillion, according to BlackRock data.
Investors largely focused on cheap, index-based ETFs, revealing the ongoing preferences for low-cost ETFs as a long-term investment vehicle and signaling that the so-called fee war in the ETF space is far from over. For instance, BlackRock’s iShares ETFs were the biggest winner, with its low-cost Core ETF suite attracting a big $38 billion chunk from the global total.
“All of the money is going into the cheapest and most boring ETFs. This is the retail investor getting back into the market with a vengeance,” Dave Nadig, chief executive of ETF.com, told the WSJ.
Among the more popular ETF picks, the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG) continued to attract inflows, bringing in $2.5 billion in net inflows over February and $4.2 billion in the first two months of the year. Investors may be looking at this cheap EM option as a way to gain access to emerging markets where valuations are much lower than the loftier prices in U.S. markets, especially after the recent Trump-induced rally.
The iShares Core S&P 500 ETF (NYSEArca: IVV) and the iShares Core S&P Small-Cap ETF (NYSEArca: IJR) were other two notable popular ETF plays over February, attracting $1.3 billion and $1.1 billion over the past month.
Financial advisors have grown increasingly focused on low-cost investments as the industry shifts toward fee-based financial advise.
“The proliferation of passive management continued to pressure both flows and effective fee rates, offsetting the positive impact of higher markets,” according to a Moody’s Investors Service report on Tuesday.
For more information on fund flows, visit our ETF performance reports category.