Not All Large ETFs Gathered Assets in 2017

By Todd Rosenbluth, CFRA

With approximately $135 billion of net inflows in the first quarter, it is easy to miss that not all ETFs faced the same demand. For an asset manager, diversification of index provider relationships and product offerings helps to counterbalance the inevitable winners and losers of assets within a period of time, according to CFRA. For example, in the first three months of 2017, BlackRock (BLK) benefitted as iShares ETFs connected to an MSCI (MSCI) or an S&P Dow Jones index collectively expanded their coffers, while funds tied to a FTSE Russell index bled assets.

Aided by $9.4 billion of new money in March, iShares ETFs licensing an MSCI index gathered $21 billion in the first quarter, the most of the 20 largest ETF provider/index provider partnerships tracked by First Bridge Data. Yet the strong summary inflows mask some of the trends happening at iShares in 2017.

iShares MSCI Core Emerging Markets (IEMG) and iShares Core MSCI EAFE (IEFA) gathered $6.6 billion and $4.0 billion in the first quarter, amid demand for international equity exposure, particularly lower cost products. Both IEMG and IEFA trade with penny bid/ask spreads and have modest net expense ratios of $0.14 and $0.08, respectively, providing support for investor asset allocation needs.

Meanwhile, iShares Edge MSCI Minimum Volatility USA (USMV) and iShares Edge MSCI Minimum Volatility Global (ACWV) had $640 million and $292 million of net outflows in the first quarter. Despite CFRA’s view that these ETFs have low risk considerations, investors rotated to other strategies.