Through three quarters of 2021, it’s clear that market participants remain enthusiastic about exchange traded funds, and there’s no sign of that changing.
While third-quarter ETF inflows were a tad slower than what was seen to start 2021, the pace of asset-gathering in the July through September period was still prolific as investors flocked to pure beta equity ETFs, short-term bond funds, and select international offerings, among others.
“Year to date global ETF flows have now comfortably exceeded the previous record from last year with current 2021 inflows at $883 billion (2020’s total was $712 billion),” according to IHS Markit research. “A slight downward trend continues in Q3 with total net new assets of $254 billion, in contrast with the massive $349 billion recorded at the start of the year. It is however important to note the influence of the vaccine rollout on investor bullishness at the start of the year and the lack of volatility in US focused flows over the past three quarters ($176, $168, $160 billion), indicating that the ETF market is still in a strong growth period.”
In the third quarter, seven of the top 10 ETFs in terms of new assets added were equity-based funds, a group including the Invesco QQQ Trust (QQQ) and another technology, indicating that investors remain enthusiastic about broad-based exposure to the largest sector weight in the S&P 500 and efficient allocations to growth stocks.
By asset class in third quarter, global investors added $188.85 billion to equity-based ETFs while directing $71.84 billion to fixed income funds, according to Markit data. Alternative funds hauled in $3.37 billion while net outflows were seen in commodities and currency ETFs.
As the research firm points out, the third quarter was a brisk period for new ETF launches, and that’s continuing to start the fourth quarter. For example, Invesco recently launched the Invesco Alerian Galaxy Crypto Economy ETF (SATO) and the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC).
As is par for the course, many of the top asset-gatherers in the third quarter were low-fee ETFs. The Invesco NASDAQ 100 ETF (QQQM) fits that bill. QQQM, which charges 0.15% per year ($15 on a $10,000 investment), is garnering plenty of acclaim among buy-and-hold investors as the cost-effective alternative to the aforementioned QQQ. QQQM turned a year old earlier this month and already has $2.45 billion in assets under management.
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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.