Investors added $43.4 billion to ETF’s in July, eclipsing June’s inflow figure of $27.7 billion and making July the strongest month of equity ETF flows this year.
According to Morgan Stanley’s Monthly Fund Flows Dashboard investors seem to have charged into ETF products during July as they look to capitalise on the S&P 500’s recent rally.
ETF inflows spike in July
Equity ETF’s saw the largest volumes according to the data with inflows of $30.8 billion for the month of July. Hybrid ETF’s reported inflows of $3.1 billion and fixed income ETF’s attracted $9.5 billion of investor cash. Year-to-date equity ETF’s have attracted $31.8 billion (most of this total came last month) hybrid ETF’s have attracted $21.4 billion and fixed income ETF’s have attracted $57.1 billion.
In total, the ETF industry has registered inflows of $110.3 billion giving an organic growth rate of 23.2% on an annualised basis.
Here are Morgan’s key takeaway from the ETF’s flows data:
“Simfund’s retail flow data for July shows that long-term mutual fund outflows decelerated to -0.7% from June’s -1.1% outflows. Inflows to fixed income funds accelerated to +10.4% in July (vs. +3.5% in June), while outflows deteriorated in equity funds (-5.8% vs. -3.2% in June) and hybrid funds (-0.1% vs. +0.6% in June). ETFs flows also improved in July, rising to +23.2% vs. 11.7% in June, as inflows to equity ETFs accelerated to +21.2% (from +6.1% in June), and inflows to fixed income ETFs rose slightly to +27.9% (from 25.6% in June).”
Overall, ETF’s had a very strong July but this strength came at the expense of mutual funds, which saw outflows of $7.5 billion during July and $10.9 billion of outflows in June.
And when you look at the whole picture of asset flows, including both ETF’s and mutual funds it becomes clear how quickly the industry is transitioning towards passive management.
…But investors are still selling equities
Morgan’s figures show that including flows from mutual funds, equity funds have seen outflows of $68.2 billion so far this year that’s including the $31.8 billion of inflows into equity ETFs. Meanwhile, fixed income funds (both mutual funds and ETFs) have seen inflows of $163.4 billion.
Morgan Stanley also breaks down the flows data to a company level.
The figures show that so far this year, excluding the firm’s ETFs, Blackrock has seen outflows of $8.2 billion. However, if you include BlackRock’s iShares figures, investors have trusted the asset manager with just under $47 billion in cash so far in 2016.
The same trend can be seen on the money managers. Excluding ETF’s Charles Schwab’s flows are -$6.3 billion. Flows into the firm’s ETFs for the year total $8.1 billion, and net flows come in at $1.8 billion. Invesco is the only one of these three managers that managed to buck the trend thanks to its money market and long-term bond funds.
Photo by lj16