ETF inflows hit record highs as investors bet on global recovery

The exchange-traded fund industry made its fastest start to the year in history with a new record of $ 139.5 billion in monthly inflows in February, investors betting on a strong economic rebound in 2021 , having used ETFs to pour liquidity into stocks.

Not only did the S&P 500, the main benchmark for the US stock market, hit a new record last month, investors were also encouraged by the massive support measures provided by the US Federal Reserve and other central banks. to allocate additional allocations to equities and commodities via ETF.

According to ETFGI, a London-based advisory firm, February’s record for the ETF industry rose 5.7% from the previous month’s best for new business to $ 132 billion.

“The ETF industry has now set a monthly record for new flows for the second time in just four months,” said Deborah Fuhr, founder of ETFGI.

Investors around the world allocated $ 222.5 billion in new liquidity to ETFs in the first two months of 2021, more than double the same period last year when stock markets around the world suffered a sharp correction due to fears about the adverse effects of the coronavirus pandemic.

Pennsylvania-based Vanguard quickly took the lead in the manager’s race to win investor liquidity with ETF inflows of $ 63 billion in the first two months of 2021, up 48% from previous levels. $ 42.6 billion raised over the same period last year. .

BlackRock, the world’s largest asset manager, has recorded inflows of $ 42.3 billion in its iShares ETF unit so far this year, up from $ 30.4 billion in the first two months of 2020. .

Ark, the $ 51 billion New York-based betting shop on disruptive tech companies like Tesla, is the third-fastest growing ETF provider with net inflows of $ 16.1 billion so far this year, quickly catching up to the $ 20.5 billion in new cash it collected over all of 2020.

“Ark’s large inflows have helped push global assets in actively managed ETFs past the $ 300 billion mark,” said Fuhr.

Ark is overtaking much larger competitors, who have also seen an encouraging recovery in ETF flows. State Street Global Advisors posted positive inflows of $ 6.8 billion in January and February combined, compared to withdrawals of $ 25.6 billion in the first two months of 2020. New business for the ETF branch of Invesco jumped to $ 11.9 billion from $ 0.6 billion in the same period last year and JPMorgan’s global ETF flows increased from $ 1.6 billion to $ 6.6 billion .

The yield on 10-year US government bonds fell from 0.9 percent at the start of this year to 1.6 percent, reflecting growing investor confidence in the outlook for the US economy in 2021. That s ‘is also reflected in stronger entries in a cyclical orientation. US sector ETFs.

U.S. financial ETFs attracted net inflows of $ 4.9 billion in February, on top of $ 5.9 billion in January. US energy sector ETFs recorded net flows of $ 3.2 billion, compared to $ 1.3 billion. US real estate ETFs added inflows of $ 2.5 billion after posting outflows of $ 0.2 billion in January. US consumer discretionary ETFs posted net inflows of $ 1.7 billion last month, up from $ 200 million in January.

Matthew Bartolini, head of ETF research for the Americas at State Street Global Advisors, noted that US sector ETFs, which track the top 11 categories of the US stock market, also had their best start to the year with entries. combined of $ 21 billion in January. and February.

According to State Street, US small-cap ETFs further demonstrated investor appetite for cyclically sensitive stocks, which registered $ 7 billion in inflows in February on top of $ 5.4 billion in January.

At the same time, ETFGI data showed that commodity ETFs have so far garnered global inflows of $ 3.2 billion this year, spurred by sharp increases in crude oil and gas prices. copper – a trend that also indicates growing confidence in the global economic recovery in 2021.

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