This past year has been a strong one for the ETF industry. With a record number of launches, already over 300 on the year, it is clear that the exchange traded world is still in full swing. But despite all of the innovation that the year has seen, investors are still partial to their big name funds, making for something of a rough barrier to entry. Below, we outline the five biggest net cash inflows to ETFs this past year, to give advisors and investors an idea of where the big money is going and whether or not your portfolio should be adjusted accordingly. Note that all data is as of 11/30/2011 [see also 25 Things Every Financial Advisor Should Know About ETFs].
5. Dividend Appreciation ETF (VIG)
Income investing has only grown in recent years as flailing markets and low interest rates have made dividends strategies some of the most lucrative opportunities on the market. This ETF tracks an index which is designed to measure the performance of U.S. common stocks that have a history of increasing dividends for at least ten consecutive years. Top holdings of the fund include McDonald’s, IBM, and Coca-Cola. VIG has a YTD return over 5%, a lot more than most funds can say on this volatile year. On top of strong gains the fund has a current 30 day SEC yield of 2.3%. This fund saw inflows of $3.7 billion on the year, a 95% growth from 2010′s inflows. On top of the heavy inflows, AUM more than doubled to $8.5 billion from its favorable performance and inflows [see also 12 High-Yielding Commodities For 2012].
4. Market Vectors-Agribusiness ETF (MOO)
This Van Eck fund provides exposure to publicly traded companies worldwide that derive at least 50% of their revenues from the business of agriculture. Top holdings of the product include heavy-hitters like Monsanto and Deere & Co. MOO had an incredible year as far as inflows are concerned. At the end of November 2010, the fund had $2.2 billion in assets. This year’s inflows total to $3.8 billion marking 19,973% increase from last years inflows of just $19 million. The fund has current AUM of about $5.9 billion, making it one of the biggest ETFs on the market [see also ETFs To Invest In Food: Five Ways To Play].
3. MSCI EAFE Index Fund (EFA)
A somewhat surprising result given all of the turmoil in Europe over the last few months. This ETF seeks to replicate a benchmark that measures the performance of equity markets in European, Australasian, and Far Eastern markets. Though the fund features a near 30% exposure to the euro zone, it focuses on the U.K. (22%), Japan (21%), and Australia (9%) over the indebted country bloc. The fund, not surprisingly, has lost 10.6% on the year, though the losses were eased by a 30 Day SEC yield of 3.4%. 2011 inflows have been kind to EFA, totaling over $4.4 billion for a fund that already had over $30 billion in AUM. The fund’s 2011 inflows smashed the $87 million from the previous year by nearly 5,000%, proving that investors have confidence in this product despite Europe’s woes [see also Ten Unexpected Observations On YTD ETF Returns].
2. Total Bond Market ETF (BND)
This ETF is currently the 12th largest in the world by assets and one of the most popular fixed income tools on the market. The fund measures the performance of the U.S. investment grade bond market and has been around since early 2007. BND has returned approximately 7% so far in 2011 while boasting a yield of 2.38% for its investors. This ETF saw net inflows on the year of $4.4 billion, marking an increase of 64.2% from 2010′s inflows. Note that over $1 billion of these inflows came during the month of November, as investors clearly grew skittish of their equity holdings and headed to safer grounds [see also How ETF Investors Can Save $415 Million (Without Breaking A Sweat)].
1. Emerging Markets ETF (VWO)
This year saw VWO surpass long-time rival EEM in total assets under management, a result that surprised very few given the 45 basis point difference in expenses. But with emerging markets taking such a heavy hit on the year, it may be a surprise to see this fund topping the list when it comes to net inflows. It would appear that after watching emerging markets perform so well over the past few years, a number of investors wanted to hop in on the action, or it may simply be people buying the fund while its cheap. Either way, the fund saw a net inflow over $7.7 billion while EEM curiously lost around $7.2 billion in assets, making it the biggest outflow of any fund on the year. Though this figure comes nowhere near the $18.2 billion inflow from 2010, it is still a strong result especially when you consider that the fund has lost 16.5% on the year [see also Back To Basics: 7 ETFs For Long-Term Investors].
|Ticker||Net Inflows (mm)||Percent Change (YoY)|
While some of the individual funds may come as a surprise to investors, the numbers for the entire industry are even more surprising. Of the 250 largest ETFs in the world, 129, or 52%, experienced net inflows. But when looking at the total ETF space, just 38% experienced net inflows, proving that the trend for investors to stick with the big names has held true for yet another year.
In total, the ETF industry featured inflows of almost $102 billion, proving that its growth is still prominent, even in a bad year for markets. That figure marks a near $2 billion increase from 2010′s inflows, paving the way for a strong and hopeful 2012 for the exchange traded universe.
Disclosure: No positions at time of writing.