As market volatility spiked in 2018, more investors turned to ETFs to diversify risk and access the robust liquidity offered from the rising popularity of the investment vehicle.
For example, BlackRock’s iShares remained the largest player in the field, attracting almost $168 billion in assets globally, with a handful of iShares ETFs experiencing record trading over 2018. Additionally, secondary trading volumes were over $7.3 trillion for iShares ETFs across the U.S. and Europe combined, compared to $5 trillion for 2017.
“Last year showed the ever-growing versatility of iShares exchange-traded funds. Investors around the world used ETFs to seek alpha, help manage risk, invest sustainably, and tap liquidity in tighter financial conditions,” Mark Wiedman, Global Head of iShares and Index Investments, said in a note. “ETFs are now established, natural parts of many investors’ portfolios.”
The ongoing inflows into ETFs reflect the continued popularity of the investment vehicle as investors’ tool of choice when accessing the global markets. At BlackRock, the iShares ETFs experienced a notable rise in adoption as a proxy for underlying securities, which is particularly noticeable during periods of heightened volatility, as many traders enjoyed the liquidity offered from these large ETF products.
“Time and time again ETFs proved their mettle in 2018 as investors turned to iShares ETFs in volatile markets to act as market shock absorbers, providing liquidity and price transparency,” Martin Small, Head of U.S. and Canada iShares at BlackRock, said in a note. “ETF trading, as a percentage of total equities traded, rose as high as 44 percent compared to the long-term average of 25 percent.”
The iShares ETF suite brought in a net global inflow of almost $168 billion, or 33% of the industry net flows of $515 billion. The iShares ETFs also enjoyed a new monthly record inflow of over $29 billion November and $44 billion in December.
“When flows and assets increase during periods of volatility and market downturn, it sends a powerful message: investors use iShares ETFs as liquid, low-cost, and transparent market access vehicles,” Carolyn Weinberg, Managing Director and Global Head of Product at iShares, said in a note. “We have particularly seen significant flows into factors and fixed income ETF products from investors building more resilient portfolios.”
For more information on the ETF industry, visit our ETF performance reports category.