Q1 ETF Flows Analysis

Taking a deep-dive into ETF flows is a good way to track potential investment opportunities and keep abreast of trends in the marketplace.  At ETFLogic we like to focus on flows – so let’s look at Q1 2019 stats by asset class, sector and themes.

*all data listed is for time range 1/1/2019 to 4/1/2019.

Asset Class Flows

Fixed income inflows of $32.5bn topped equities by nearly $15bn. But equities still had the best quarter since 2009. Commodities and currency ETFs overall experienced slight outflows.

Inflows into fixed income ETFs were led by shorter duration corporate exposures: Vanguard Intermediate-Term Corporate Bond ETF (VCIT) and Vanguard Short-Term Corporate Bond ETF (VCSH)These strong flows were matched with strong returns as VCIT posted a total return of nearly 5% in Q1 

TickerNameAUMYTD FlowsYTD %
VCITVanguard Intermediate-Term Corporate Bond ETF$23bn$4bn4.91%
VCSHVanguard Short-Term Corporate Bond ETF$24bn$3bn2.47%
MBBiShares MBS ETF$16bn$3bn1.65%
BNDXVanguard Total International Bond ETF$16bn$3bn2.55%
IEFiShares 7-10 Year Treasury Bond ETF$13bn$2bn1.88%
LQDiShares iBoxx USD Investment Grade Corporate Bond ETF$34bn$2bn5.18%
JNKSPDR Bloomberg Barclays High Yield Bond ETF$9bn$2bn8.92%
EMBiShares JP Morgan USD Emerging Markets Bond ETF$17bn$2bn6.96%
HYGiShares iBoxx USD High Yield Corporate Bond ETF$16bn$2bn7.27%
GOVTiShares U.S. Treasury Bond ETF$9bn$2bn1.36%

We saw $17bn flow into equities over the quarter led by Vanguard S&P 500 ETF (VOO)and iShares Core MSCI Emerging Markets ETF (IEMG),each with over $5bn. 

TickerNameAUMYTD FlowsYTD %
VOOVanguard S&P 500 ETF$10bn$5bn14.64%
IEMGiShares Core MSCI Emerging Markets ETF$59bn$5bn10.96%
USMViShares Edge MSCI Min Vol U.S.A. ETF$25bn$3bn14.03%
IEFAiShares Core MSCI EAFE ETF$60bn$3bn12.15%
VTIVanguard Total Stock Market ETF$109bn$3bn15.07%
EEMiShares MSCI Emerging Markets ETF$34bn$2bn11.26%
VWOVanguard FTSE Emerging Markets ETF$63bn$2bn12.78%
QUALiShares Edge MSCI U.S.A. Quality Factor ETF$10bn$2bn16.92%
XLCCommunication Services Select Sector SPDR Fund$5bn$2bn13.53%
IJRiShares Core S&P Small Cap ETF$43bn$2bn12.39%

Sectors

  • The Telecommunications sector led inflows with the Communication Services Select Sector SPDR Fund (XLC)bringing in $2bn.  
  • Real Estate sector ETFs saw $3bn of inflows led by $1.4bn into Vanguard Real Estate ETF (VNQ)and $872m into iShares U.S. Real Estate ETF (IYR).
  • Healthcare sector ETFs experienced $1bn in inflows, led by $540m into iShares U.S. Medical Devices ETF (IHI)followed by general health care sector ETFs Health Care Select Sector SPDR Fund (XLV) With inflows of $444m and Vanguard Health Care ETF (VHT)with $415m.  However, the Biotechnology subsector saw major outflows, led by a $443m outflow from iShares NASDAQ Biotechnology ETF (IBB).
  • The Consumer sector had outflows of $625m for the quarter, which might reflect on the growing worries of a global economic cooling throughout Q1.
  • The Financial sector experienced the largest outflows of $4.6bn led by the Financial Select Sector SPDR Fund (XLF)with $2.6bn of outflows.
  • Industrials had outflows of $1.46bn, led by the Industrial Select Sector SPDR Fund (XLI) 

Geography

  • A significant $16bn of inflows into emerging markets ETFs led by iShares Core Emerging Markets ETF (IEMG) with $5bn and iShares MSCI Emerging Markets ETF (EEM)with $2.5B. The interest in emerging markets may be related to the hopes for progress in a U.S.-China trade deal. The Institute of International Finance (IIF) also predicts a recovery of emerging markets throughout 2019, fueled by loose international monetary policy.
  • China A-Shares exposure ETF (ASHR)was near the top with $800mm inflows. With the close of the quarter we saw strong manufacturing data out of China and the U.S., which diminished investor worries about a potential global economic slowdown. The quarter closed out with significant progress in trade talks between the U.S. and China, and the President is now hinting at finalizing a deal within the next few weeks.
  • Japan saw outflows of $4bn in Q1, led by a $2.3bn out of the iShares MSCI Japan ETF (EWJ)
  • Europe had outflows of $1.9bn, led by $692m exiting the Vanguard FTSE Europe ETF (VGK)
  • Middle East & Africa had inflows of $294m, led by a $173m into iShares MSCI Saudi Arabia ETF (KSA)

Themes

  • Looking at Q1 ETF investment themes, top inflows were into ESG – totaling nearly $1.4bn. This comes as no surprise given investors are placing greater emphasis on the potential impact of their investments. The new ESG ETF Xtrackers MSCI U.S. ESG Leaders Equity ETF (USSG) led the charge with close to $900m of inflows. 
  • Infrastructure names had $109m inflows. Infrastructure is projected to continue to be a hot investment area throughout the rest of 2019. 
    • Top inflows came from FlexShares STOXX Global Broad Infrastructure Index Fund (NFRA)with $59m
  • Hedge fund replication themed ETFs posted $108m of inflows
  • Significant outflows of $614m from Natural Resources ETFs led by United States Oil Fund (USO)with -$377m. SPDR S&P Global Natural Resources ETF (GNR) and iShares North American Natural Resources ETF (IGE)also posted over $100m in outflows in Q1. FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR)still managed to post $70m in inflows, followed by SPDR S&P North American Natural Resources ETF(NANR)with $18m.
  • Vice related ETFs posted $50m in flows
  • Artificial intelligence themed ETFs saw inflows of $15m.

Top 10 Issuers by YTD Flows

BlackRock still holds first place but Vanguard is catching up very quicky, probably related to the “fee wars.”  Interesting to see Charles Schwab and First Trust with more flows than SSGA.