U.S. ETFs gathered $26.3 billion in the month of November, driven primarily by inflows into U.S. equity focused products, according to data from etf.com. Equity ETFs added more than $19 billion of fresh money while U.S. fixed income offerings experienced outflows.
iShares, which is owned by BlackRock (BLK) was the biggest beneficiary of investor optimism toward equities, as the industry leader pulled in nearly half of the overall inflows, with $13 billion, pushing its asset base up to $827 billion.
BlackRock experienced better asset stability in the third quarter of then many of its peers in the asset management according to SNL Financial research. BLK's approximate 5% asset base decline was hurt by market depreciation, partially offset by $35 billion in long-term inflows ($23 billion into iShares products).
Robert Clark and Sampath Sharma noted in a SNL Data Dispatch note this week that large asset managers Artisan Partners Asset Management (APAM), Franklin Resources (BEN), Waddell & Reed Financial (WDR) and WisdomTree Investments (WETF) each saw assets decline more than 10% during the quarter.
Erik Oja, S&P Capital IQ equity analyst covering asset managers, thinks that the long-term trend away from active funds to passive funds was exacerbated during the third quarter volatility. Oja believes that Blackrock, of all publicly-traded asset management companies, appears to be the primary beneficiary of this trend, as new assets pour into their wide offerings of relatively low fee ETFs.
But unlike in the third quarter where BlackRock benefited from a flight to safety through its fixed income ETFs, iShares inflows in November were driven by its Russell index based equity ETFs.
iShares Russell 1000 (IWB), iShares Russell 2000 (IWM) and iShares Russell 1000 Growth (IWF) were among the industry's biggest asset gatherers in November, bringing in a combined $5.8 billion in new money. Meanwhile, two developed international equity products, iShares MSCI Core EAFE (IEFA) and iShares MSCI EAFE (EFA) added an additional $2.6 billion in assets and were part of the same top-10 list of ETFs with
inflows. IEFA has a lower expense ratio and offers more small- and mid-cap exposure than EFA.
However, all was not bright for iShares, as three of its fixed income ETFs were also among those experiencing the ten biggest outflows in November, led by iShares 1-3 Year Treasury Bond (SHY), as investors looked to take on more risk through equities.
Vanguard, which has $483 billion in assets and is the second largest provider, added $6.5 billion in assets in November. Two of Vanguard's ETF had two of the ten largest inflows in November, with Vanguard 500 Index (VOO) and Vanguard FTSE Developed Markets (VEA) gathering $930 million and $831 million, respectively. Vanguard did not have any ETFs in the top-10 list for outflows for the month.
S&P Capital IQ believes investors can use ETF inflow and outflow to keep up with market trends, as these products have become a go-to-vehicle to get diversified low-cost exposure to various investment styles. It should be noted, however, that buying last month's winners or selling last month's losers presents risks since past performance is not necessarily indicative of future results. Our rankings are based on a combination of holdings-based analysis and ETF attributes such as costs and liquidity.