Bond ETFs Propel ETF Industry To Another Record Assets Tally

Thanks in large part to massive inflows to fixed income funds, the global exchange-traded funds industry reached another assets under management record at the end of May with $3.143 trillion in combined AUM.

The U.S. ETF market, the largest in the world, also hit a record with a $2.229 trillion in AUM, according to ETFGI, a London-based provider of ETF data.

Adding Up Assets

“Investors put an additional $4.2 billion of net new money into fixed income ETFs in May, pushing the year to date flows figure to $42 billion, according to Factset data. While demand remained strong for actively managed fixed income mutual funds this year, up until last week, a wide variety of lower-cost ETFs that offer intra-day liquidity and typically seek to passively replicate an index have been gaining share in 2016,” said S&P Capital IQ in a note out Monday.

Year-to-date, four of the top asset-gathering ETFs are bond funds, a group that includes the iShares Barclays Aggregate Bond Fund AGG and the Vanguard Total Bond Market ETF BND.

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“In May 2016, ETFs/ETPs have gathered net inflows of US$10.60 billion &mbsp; Fixed income ETFs/ETPs gathered the largest net inflows with US$7.47 billion, followed by commodity ETFs/ETPs with US$5.47 billion, while equity ETFs/ETPs experienced net outflows of US$4.53 billion. This marks the 28th consecutive month of net inflows,” said ETFGI.

Emerging Markets

Another favored destination for investors has been emerging markets debt. As has been widely reported this week, the iShares JPMorgan USD Emer Mkt Bnd Fd ETF EMB is now the largest emerging markets bond fund of any variety in the world.

The PowerShares Emerging Markets Sovereign Debt Portfolio PCY, the second-largest emerging markets bond ETF trading in the U.S. behind EMB, has added nearly $400 million in new money this year.

In May, Vanguard was the top asset gatherer, adding $8.46 billion in new ETF assets. Charles Schwab Corp SCHW was next at $1.32 billion followed by VanEck at $1.11 billion, according to ETFGI data.

“Year-to-date, Vanguard gathered the largest net ETF/ETP inflows YTD with US$32.26 Bn, followed by iShares with US$27.08 Bn and SPDR ETFs with US$6.29 billion net inflows,” said ETFGI.