ETF Industry on Pace for Another Record Year

The exchange traded fund industry has hit 2018 running after experiencing another record month of inflows.

U.S.-listed ETFs have attracted $78 billion in net inflows in January, the highest monthly inflow ever, breaking the previous record of $59 billion set back in November 2016, according to a State Street Global Advisors research note.

Looking at the investment breakdown, investors continued to pile into equities as stock ETFs bringing in 86% of overall flows in January with a robust $67 billion, which was also a record single-month tally.

Among sector bets, investors focused on technology ETFs, which attracted over $3.7 billion in January, followed by industrials with $2.7 billion, financials with $1.5 billion and energy with $1.2 billion.

Meanwhile, bond ETFs still brought in $9.1 billion for the month, despite rising interest rate concerns and yields on benchmark 10-year Treasuries pushing higher.

Looking ahead, Matthew Bartolini, Head of SPDR Americas Research State Street Global Advisors, argued that the forward trajectory of the ETF industry looks solid as long as three leading factors persist, including a coordinated global economic growth, low volatility of global economic data and positive global earnings revisions.

However, Bartolini still warned about potential bumps and risks down the road that could upend the markets, so investors should be properly diversified to limit risks while still having a toe in the markets.