With approximately $625 billion of net inflows into ETFs as of mid-December, 2022 has been a year to remember particularly as advisors and end clients navigated a volatile stock and bond market. As of December 19, Vanguard had a slight lead with $184 billion of net inflows according to data on VettaFi’s platforms, just ahead of BlackRock’s $174 billion and well ahead of all other providers. We could be in for an exciting photo finish to the year. Yet during a mid-December Investment Insights Summit hosted by VettaFi, many more advisors told us Vanguard was the asset manager they were working with most.
Indeed, 40% of advisors that responded to the question selected Vanguard compared to 19% for BlackRock and 7.5% for State Street Global Advisors, while 33% chose “someone outside of the top three.” Before we briefly review what kind of year 2022 was for the top three ETF firms, it should be noted that some of the advisors participating in the VettaFi poll continued to favor mutual funds over ETFs.
Vanguard’s ETF success in 2022 has been driven by its broad asset allocation-oriented ETFs. In addition to the $40 billion of net inflows for the Vanguard S&P 500 ETF (VOO), the most in the industry, the firm gathered more than $10 billion into each the Vanguard FTSE Developed Markets ETF (VEA), the Vanguard Total Bond Market ETF (BND), and the Vanguard Total Stock Market ETF (VTI), which provide international equity, investment-grade fixed income, and multi-cap U.S. equity exposure. However, where high demand was surprising was in style investing. The Vanguard Value ETF (VTV) pulled in $11 billion only moderately more than the $9.1 billion for Vanguard Growth ETF (VUG), despite the value fund outperforming year to date by 3,000 basis points.
Meanwhile, Blackrock’s ETF success in 2022 has been driven by fixed income ETFs, particularly those focused on Treasuries. While the iShares Core S&P 500 ETF (IVV) gathered the most new money for BlackRock, with $24 billion, the next 11 most popular funds provided fixed income exposure. Seven of them owned only Treasury bonds, spread across the yield curve.
The iShares 20+ Year Treasury Bond ETF (TLT) gathered the most with $17 billion, but the iShares 7-10 Year Treasury (IEF) and iShares 1-3 Year Treasury Bond (SHY) gathered $8.7 billion and $8.1 billion, respectively, providing intermediate- and short-term exposure. Investors sought the relative safety of Treasury bonds and the strong liquidity of these iShares ETFs amid concerns about a pending recession.
Within equities, one of the notable successes was the iShares MSCI Emerging Markets Min Vol Factor (EEMV), which provides exposure to lower-risk stocks in markets like China, India, and Taiwan. EEMV gathered $4.6 billion of new money, more than the $3.8 billion that flowed into the iShares Core MSCI Emerging Markets ETF (IEMG).
Meanwhile, State Street Global Advisors added $35 billion so far this year even as the SPDR S&P 500 ETF (SPY) had $12 billion in net outflows. The firm was aided by its own short-term Treasury product, the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), and demand for sector funds like Health Care Select Sector SPDR (XLV).
Earlier this week, we highlighted five breakout ETFs from firms outside of the top three firms. Including products from JPMorgan and Pacer ETFs. Many of the most innovative ETFs are available from small, up-and-coming firms.
For more news, information, and analysis, visit the Fixed Income Channel.