U.S. ETFs Attract $53 Billion in First Quarter: Morningstar

ETF Trends

U.S.-listed exchange traded funds have tallied another $50 billion growth spurt in the first quarter as broad stock indices strengthened and broke records.

In March, investors funneled $16.9 billion into ETFs, lifting first-quarter total asset inflows to $53.1 billion, writes ETF analyst Micahel Rawson for Morningstar. U.S.-listed ETFs have gathered over $50 billion in four of the past five quarters.

U.S.-stock related funds topped the inflows over March, bringing in $11.2 billion. Bond ETFs still attracted investment interest with an additional $4.8 billion. On the flip side, international stocks saw $2.7 billion in outflows and commodities lost $2.4 billion.

Over the first quarter, U.S.-stock ETFs attracted $16.4 and bond ETFs, international stock ETFs added $16.0 and bond ETFs brought in $8.3 billion. Commodities, though, saw $6.9 billion in outflows.

Among U.S. stock ETFs, Morningstar found large value and small blend themes attracted strong inflows for the quarter, including iShares MSCI USA Minimum Volatility (USMV) , which had inflows of $1.7 billion, and iShares Russell 2000 Index (IWM) , which attracted $3.4 billion. Dividend ETFs also attracted heavy interest, with Vanguard Dividend Appreciation ETF (VIG) bringing in $1.2 billion. However, PowerShares QQQ (NasdaqGM:QQQ) saw $1.1 billion in outflows.

Short-duration bond and bank loans were popular themes within the fixed-income space over the first quarter. For instance, Vanguard Short-Term Bond ETF (BSV) brought in $2.2 billion and the PowerShares Senior Loan Portfolio (BKLN) expanded by $1.5 billion. Meanwhile, intermediate- and long-term bonds saw outflows, including iShares Barclays TIPS Bond (TIP) , which lost $1.5 billion, and iShares iBoxx $ Investment Grade Coroporate Bond (LQD) , which contracted by $1.4 billion.

Investors also funneled $2.7 billion into alternative ETF strategies, with inverse equity ETFs and volatility-linked funds making a comeback.

The WisdomTree Japan Hedged Equity Fund (DXJ) saw the largest inflows over the quarter, garnering $3.9 billion in assets. The SPDR S&P 500 (SPY) saw the highest redemptions, losing $8.1 billion in assets.

The so-called fee war seems to be working out for providers that have aggressively slashed fees. For instance, while the SPY ETF saw outflows, the cheaper iShares Core S&P 500 ETF (IVV) added $2.3 billion and the  Vanguard S&P 500 ETF (VOO) saw $1.5 billion in new assets. Looking at fund providers, iShares attracted $17.6 billion in new assets over the first quarter and Vanguard saw $19.7 in new inflows. In comparison, State Street Global Advisors lost $6.4 billion over the quarter.

Globally, the ETF industry saw record quarterly inflows, fueled by developed market equity demand. [Developed Market Equity Demand Fuels Record Quarterly ETF Inflows]

For more information on ETF asset flows, visit our ETF performance reports category.

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own SPY, TIP, LQD, QQQ, BSV and IWW.

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.

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