Investors allocated plenty of capital to exchange traded funds in August as the asset class continued a torrid year-to-date pace of asset gathering that has seen previous annual inflows record already fall. Actually, investors added more than $31 billion to ETFs last month.
However, the bulk of those flows went to just a small number of plain vanilla ETFs.
“More than $31 billion flowed into exchange-traded funds over the month, according to FactSet data, bringing total global assets to almost $4.2 trillion. However, while there are nearly 1,800 U.S.-listed ETFs currently trading, nearly all the action is concentrated within a vanishingly small part of the ETF marketplace. To be exact, 51.3% of August’s inflows went to just 10 funds,” reports Ryan Vlastelica for MarketWatch.
S&P 500-tracking ETFs, such as the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV), and the Vanguard 500 Index (NYSEArca: VOO), were prolific asset gatherers last month.
“Due to its size and liquidity, many investors use the SPY, as it is known for its ticker symbol, as a way to hedge their portfolios or make short-term bets. As a result, flows into the fund can be quite volatile; even with the August inflows, the SPY has seen outflows of $3.47 billion thus far this year,” according to MarketWatch.
Related: Smart ETF Investing is More Than Factors
SPY has become the market’s go-to investment vehicle for both core and tactical exposure, especially among large institutional traders who want to quickly and efficiently go in and out of the market – SPY is the only ETF traded with a bid-ask spread of just a penny for more than 12 consecutive years. SPY is the world’s largest ETF. IVV is the only other U.S. ETF with more than $100 billion in assets under management.
Other top asset-gathering ETFs last month included familiar names such as the PowerShares QQQ (NasdaqGM: QQQ), which tracks the tech-heavy Nasdaq-100 Index; and the SPDR Gold Shares (NYSEArca: GLD). GLD is the world’s largest gold ETF. IVV is the top asset-gathering ETF on a year-to-date basis.
For more information on ETFs, visit our ETF 101 category.
Tom Lydon’s clients own shares of SPY, QQQ and GLD.