Vanguard takes lion’s share of US ETF inflows – for second consecutive month

Jun 9th, 2012 | By | Category: ETF and Index News

US-listed ETFs achieved $2.2 billion in net inflows in May, according to analysis from investment data provider Morningstar.

Vanguard takes lion's share of US ETF inflows - for second consecutive month

Vanguard’s focus on low-costs and core-holding ETFs has helped the index specialist attract over $24 billion in net ETF inflows so far this year.

Once again, Vanguard recorded the largest ETF inflows, topping the chart for the second consecutive month, collecting $3.24 billion in net new assets in May. The Vanguard Total Bond Market ETF (BND) and the Vanguard S&P 500 (VOO), which gathered $1.2 billion and $644 million, respectively, drove inflows for the firm.

Vanguard’s focus on low-costs and core-holding ETFs has helped the index specialist attract over $24 billion in ETF inflows so far this year. The company’s total US-listed ETF AUM now stands at $197 billion, representing a market share of 17.4%. [See Vanguard undercuts rivals with low-cost London-listed ETF range]

Investors continued to search for yield, with taxable-bond ETFs, which took in approximately $7 billion, seeing significantly higher inflows than any other US ETF asset class. Indeed, across the board, investors flocked to investment-grade as well as government bond ETFs.

One major success story in this asset class over the past month has been the Pimco Total Return ETF (BOND). BOND accounted for the vast majority of Pimco’s $854 million May ETF inflows, the second largest net inflow achieved by any US ETF provider in May. The actively managed ETF, run by Pimco co-founder Bill Gross, invests primarily in investment grade debt securities and has accumulated almost $1.3 billion in assets since launching on 29 February 2012.

Despite the stretch for yield, investors shunned high-yield bond offerings. Of note, the SPDR Barclays Capital High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) gave up $1.3 billion and $493 million, respectively. However, JNK’s outflows deserves special mention as the ETF was the subject of one particularly large (c. $780 million) ex-specie redemption from an institutional client.

The international equities asset class accounted for the greatest share of May outflows, losing $3.5 billion. Emerging market equity ETFs, such as the iShares MSCI Emerging Markets Index ETF (EEM) and the Vanguard MSCI Emerging Markets ETF (VWO), which both saw significant outflows, provided the fuel for the fire. EEM shed $1.5 billion, while VWO gave up $622 million.

Although the US equity asset class saw a net outflow of only $562 million, a number of notable products suffered significant withdrawals. The iShares Russell 2000 ETF (IWM) and the Nasdaq-100 tracking PowerShares QQQ (QQQ) gave up $1 billion and $777 million, respectively.

Overall, ETFs inflows were pretty lacklustre, with moderate performance across the board. The $2.2 billion net inflow was broadly in line with April’s gain of $2.4 billion – both considerably less than March’s gain of $13.7 billion.

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