What ETFs Were Popular in November?

In the past month, the SPDR S&P 500 ETF (SPY A-) gathered $9.1 billion according to VettaFi data. Not far behind were the Vanguard S&P 500 ETF (VOO A) and the iShares Core S&P 500 ETF (IVV A). These ETFs added $6.3 billion and $6.0 billion, respectively. For the year, VOO and IVV are the industry leaders, with $39 billion and $32 billion, respectively. Meanwhile, SPY’s prior net outflows were erased in November. 

Last week, many reflected on the passing of investment legend Charlie Munger. I was reminded that Munger and his Berkshire Hathaway colleague Warren Buffett encouraged many to invest in S&P 500 funds over actively managed funds: “When trillions of dollars are managed by Wall Street charging high fees, it will usually be the managers who reap outsized profits, not the clients. Both large and small investors should stick with low-cost index funds.”  

SPY is the most expensive of the trio of popular S&P 500 Index ETFs, with its 0.09% expense ratio. This is a significant savings compared to investing in active mutual funds. Meanwhile, IVV and VOO charge 0.03%. While fees matter, some prefer SPY’s greater trading volume to support short-term positions. I discussed these trends on Yahoo Finance last week. 

We think many advisors and end clients have turned to these ETFs due in part to the strong performance in 2023. The trio of S&P 500 ETFs were up 19% year to date through November. In addition, we believe some have used the tax-loss harvesting season to shift from active mutual funds to low-cost index ETFs. 

SPY, IVV, and VOO are three of the largest ETFs worldwide, so their popularity might not be newsworthy. However, in November, a pair of actively managed ETFs that launched in 2023 had relatively strong demand. 

The JPMorgan Hedged Equity Laddered Overlay ETF (HELO B+) launched at the end of September. HELO is actively managed, owning large-cap U.S. stocks while employing a laddered options strategy that seeks to reduce downside risk in falling markets. The ETF now manages $160 million, after net inflows of $96 million in November.  

HELO is managed by the same team behind JPMorgan’s successful covered call ETF suite and a hedged equity mutual fund. The JPMorgan Equity Premium Income ETF (JEPI A) added $13 billion of new money in 2023, pushing its asset base to $30 billion. Meanwhile the asset base for the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ A+) is $7.4 billion, due to more than $6 billion of new money this year. 

We believe HELO takes a greater risk mitigation approach than income-focused JEPI and JEPQ. HELO could be appealing to those expecting more stock market volatility in 2024.  

While demand for and supply of active equity ETFs has been strong in 2023, investors have also embraced fixed income products. For example, the BlackRock Flexible Income ETF (BINC) added approximately $210 million in November. The active ETF now has $380 million in assets.   

Managed by Rick Rieder, BlackRock’s chief investment officer of global fixed income and a team of BlackRock colleagues, the multisector bond ETF launched in May 2023. BINC has a mix of investment-grade and high yield corporate bonds, but also owned CLOs, mortgage, and agency bonds. BINC sported a 30-day SEC yield of 5.5%, with an average duration of just under three years. Rieder and team also manage mutual funds for BlackRock. 

The monthly net inflows for BINC and HELO are more comparable to the daily flows of SPY, IVV, and VOO. However, it is a good sign to us that advisors and investors who favor active management are increasingly turning to ETFs. We think the future for active ETFs remains bright. 

VettaFi will be recapping the year in equity and fixed income markets and previewing what’s ahead on December 14. Reserve your place to join Tom Lydon, myself, and industry experts from the ETF industry by registering today. 

For more news, information, and analysis, visit VettaFi | ETFDB.