A Look At The Prolific Q1 ETF Asset Gatherers

Exchange traded funds hauled in $135.5 billion in new assets in the first quarter, with investors displaying an overt preference for low-fee, international equity funds.

For example, the iShares Core MSCI Emerging Markets ETF IEMG, one of the least expensive emerging markets ETFs available to U.S. investors, was the top asset-gathering in the first three months of the year. On the other hand, investors departed some once hot US-focused strategies, including the iShares Edge MSCI Min Vol USA ETF USMV.

The iShares Core MSCI EAFE ETF IEFA, which charges 0.08 percent per, was another prolific asset gatherer in the first quarter. IEFA is one of the least expensive ex-US developed markets ETFs available and provides investors with cost-efficient exposure to the widely followed MSCI EAFE Index.

“iShares MSCI Core Emerging Markets (IEMG) and iShares Core MSCI EAFE (IEFA) gathered $6.6 billion and $4.0 billion in the first quarter, amid demand for international equity exposure, particularly lower cost products. Both IEMG and IEFA trade with penny bid/ask spreads and have modest net expense ratios of $0.14 and $0.08, respectively, providing support for investor asset allocation needs,” CFRA Research said in a note out Tuesday.

Index brands also proved beneficial to ETF issuers as investors continued pouring money into ETFs tracking benchmarks from well-known providers such as Standard & Poor's and MSCI Inc. MSCI.

“Aided by $9.4 billion of new money in March, iShares ETFs licensing an MSCI index gathered $21 billion in the first quarter, the most of the 20 largest ETF provider/index provider partnerships tracked by First Bridge Data. Yet the strong summary inflows mask some of the trends happening at iShares in 2017,” CFRA said. “iShares also benefitted from its partnership with the indices offered by the index division of S&P Global, as these ETFs incurred $17 billion of net inflows.”

In the first quarter, the iShares Core S&P 500 ETF IVV joined the SPDR S&P 500 ETF SPY as the only ETFs with more than $100 billion in assets under management.

CFRA has overweight ratings on IEMG and IVV and a marketweight rating on IEFA.

The Vanguard FTSE Developed Markets ETF VEA, a rival to IEFA, added $4.3 billion in the first quarter. VEA, which is also one of the cheapest ex-US developed markets ETFs, includes exposure to Canadian stocks, which IEFA does not.