US ETFs on the verge of reaching $ 7 trillion

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There were $ 6.99 trillion in listed ETF assets in the United States at the end of October 2021, up from $ 5.47 trillion at the end of 2020, according to CFRA data. With the S&P 500 index rising slightly, we will see a second trillion dollars crossed this year as stocks inside ETF SPDR S&P 500 (ESPION) and even large-cap equity ETFs rise in value. Indeed, the combination of strong stock returns and $ 726 billion in positive net profits ETF flows from the start of the year until October pushed total assets to new highs. Equity ETFs have raised 76% of new capital so far in 2021, slightly lower than the asset class’s 80% market share, as fixed income ETFs have outgrown their weight with 23% and gained some of the share typically held by commodities funds, which were in disgrace. As investors become more comfortable using ETFs for strategic and tactical purposes, fixed income ETFs are likely to be used more to meet investors’ asset allocation and cash management needs. individuals and institutions.

Figure 1: Share of asset classes in the ETF market (%)

CFRA ETF data. As of October 29, 2021.

There are seven ETFs with over $ 100 billion in assets and 129 with over $ 10 billion. With $ 417 billion in assets, State Street Global Advisors’ SPY remains the industry heavyweight, but Vanguard offers three equity products with more than $ 100 billion in assets each, led by Vanguard Total Stock Market ETF (VTI). Two iShares ETFs and one Invesco ETF make up the remainder of the septet. However, iShares has the largest number of ETFs with over $ 10 billion in assets (55), followed by Vanguard (35), State Street Global Advisors (19) and Charles Schwab (9). While US stocks IShares Core S&P 500 ETF (IVV) is the company’s largest offering, demand has been strong for its international equities IShares Core MSCI Emerging Markets ETF (IEMG) and his fixed income IShares Core Total USD ETF Bond Market (IUSB) in 2021.

Figure 2: Firms with ETFs Over $ 10 Billion (%)

etfs-2021-10B.png

CFRA ETF data. As of October 29, 2021

October was another high demand month for ETFs. While much of the attention over the past month has focused on the first bitcoin-focused ETF, ProShares Bitcoin Strategy ETF (BITO), and its ability to raise $ 1.3 billion in assets, the industry attracted $ 77 billion in new money over the past month. Asset allocation products like IVV and VTI continued to raise fresh money, but more tactical ETFs were also in demand; notably, KraneShares CSI China Internet ETF (KWEB). Despite a 38% drop since the start of the year, investors have invested in this fund, which is concentrated in Alibaba, JD.com and Tencent Holdings. The CFRA believes that KWEB’s risk-return mix is ​​unattractive compared to other international equity ETFs, in part because of its ETF holdings.

Conclusion

There has been a record demand for ETFs in 2021 as investors turned to equity and fixed income products, which offer diversification benefits, ease of use, low expense ratios. and tax efficiency compared to mutual funds or individual securities. We could see over $ 900 billion in net inflows in 2021, which would almost double the previous record set in 2020. For investors looking to sort through the growing commodity universe, the CFRA notes more than 2 100 ETFs, with a focus on future risk, reward and costs.

Todd Rosenbluth is Director of ETF and Mutual Fund Research at CFRA. Learn more about CFRA’s ETF research here.


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