October ETF Data: Surge In Inflows, Back Above $1 Trillion

by on November 3, 2011 | Updated April 29, 2013 | ETFs Mentioned:

ETF assets rode a surge in stock markets higher in October, as total AUM for U.S.-listed exchange-traded products climbed higher by more than 11% last month. According to the latest figures from the National Stock Exchange, ETP assets stood at $1.08 trillion at the end of October, with monthly inflows of nearly $24 billion for the month. That surge in inflows, combined with a stellar stretch for global equity markets, pushed assets back above the $1 trillion mark. After a prolonged period of poor performance, industry assets had dipped to about $973 billion at the end of the third quarter.

Domestic equity funds accounted for a significant portion of total inflows, though creations in international stock funds and fixed income products also contributed to the banner month. With ten months in the books, ETF inflows total about $102 billion for 2011. That haul represents an increase of about 15% compared to the same period in 2010 and a jump of more than 40% from inflows in 2009.

iShares, which has seen its market share shrink amidst intense competition from low cost issuers, saw an explosion of demand for its products in October. iShares ETFs saw aggregate inflows of more than $10 billion, led by a product that has been bleeding assets for much of the last year. The iShares MSCI Emerging Markets Index Fund (EEM) led all ETFs with $3.8 billion in net inflows last month. Six other ETFs raked in $1 billion or more as well:

  • iShares Russell 2000 Index Fund (IWM): $2.9 billion
  • PowerShares QQQ (QQQ): $1.9 billion
  • Dow Jones Industrial Average SPDR (DIA): $1.2 billion
  • Vanguard MSCI Emerging Markets ETF (VWO): $1.2 billion
  • S&P 500 SPDR (SPY): $1.2 billion
  • iShares iBoxx High Yield Corporate Bond Fund (HYG): $1.1 billion

EEM had been steadily losing ground to VWO, the Vanguard fund linked to the exact same underlying index but with a considerably lower expense ratio. The October surge into EEM reversed that trend, though the fund still has about $13 billion less in assets than it did one year ago.

Another closely-watched head-to-head battle also saw a win for a larger, more established fund that had been losing ground to a cheaper alternative. The Gold SPDR (GLD) took in about $645 million last month, dwarfing the $92 million haul for the COMEX Gold Trust (IAU). Both exchange-traded products hold gold bullion, but IAU boasts a considerably lower expense ratio (0.25% compared to 0.40% for GLD).

In terms of year-to-date cash inflows, Vanguard maintains a sizable lead; the low cost issuer crossed the $30 billion mark in October.

In total the number of ETPs with $100 million or more in AUM climbed to 535, representing about 39% of the product lineup. A year ago, about 471 ETPs, representing about 44% of the lineup, topped the $100 million mark.

Small Issuers Gaining Steam

iShares certainly wasn’t the only ETF issuer that had a successful October; a number of smaller firms made huge strides last month as well. First Trust’s October inflows amounted to more than 8% of the previous month’s assets. Rydex, the issuer behind several popular equal-weighted ETFs, took in about $366 million on the month; that total is equal to about 5% of AUM at the end of the third quarter. And ALPS remained red-hot behind the popular Alerian MLP ETF (AMLP); that fund, the only ETF focusing on MLPs, raked in another $139 million and the issuer’s aggregate inflows represented about 8% of prior month assets [see Fact & Fiction On MLP ETFs].

A few smaller products saw big jumps in asset levels; the CurrencyShares Japanese Yen Trust (FXY) saw inflows of about $390 million, or more than 140% of the previous month’s assets, after Tokyo stepped in to intervene in currency markets. And in perhaps an indication of bearish sentiment towards banks, Direxion’s 3x inverse financials ETF (FAZ) saw inflows last month of more than $630 million–roughly 60% of the prior month’s asset base.

Disclosure: No positions at time of writing.