U.S. Listed ETFs Garner Record Inflows In 2017

U.S.-listed ETFs invited record asset inflows in 2017, per data compiled by London-based ETF industry consultant ETFGI.

ETFGI reported that assets in ETFs listed in the United States increased 34.3% year over year in 2017. It grew to $3.42 trillion at the end of December from $2.55 trillion at the end of 2016. ETFGI reported that this was the fastest growth in ETF assets since 2009; post the global financial crisis recovery.

U.S. Equity ETFs

U.S. economic fundamentals are strong at the moment. GDP increased 3.2% year over year in the third quarter of 2017 compared with 3.1% in the second quarter. Moreover, President Donald Trump’s tax reform was recently signed into law, leading Fed members to increase their expectations for 2018 GDP growth from 2.1% to 2.5% (read: DOW ETFs: More Upside Ahead?).

Coming to employment, Bureau of Labor Statistics reported that the U.S. economy added 148,000 jobs in December. Although this was below the 190,000 number expected by economists, unemployment rate stood at 4.1% in December, the lowest level since 2000.

International Equity ETFs

The global economy is expected to grow almost 4% this year in purchasing-power-parity (PPP) terms, a seven-year high, according to research conducted by PricewaterhouseCoopers (PwC).

Developed international equities have been rallying owing to strong trade outlook. Moreover, emerging markets have been rallying and staging a broad-based recovery. Strong growth potential drove inflows into emerging market funds (read: Top & Flop Zones of 2017 and Their ETFs).

Let us now discuss the top four ETFs that attracted the highest amounts of inflows.

iShares Core S&P 500 ETF IVV

This fund is a low-cost ETF that seeks to provide exposure to the large established U.S. companies and tracks the S&P 500 index. It garnered $30.2 billion in inflows in 2017.

It has AUM of $146.4 billion and charges a fee of 4 basis points a year. From a sector look, the fund has high exposures to Information Technology, Financials and Health Care with 24.1%, 14.6% and 13.8% allocation, respectively (as of Jan 5, 2018). The fund’s top three holdings are Apple Inc (NASDAQ:AAPL) , Microsoft Corporation (NASDAQ:MSFT) and Amazon.com Inc (NASDAQ:AMZN) with 3.8%, 2.9% and 2.1% allocation, respectively (as of Jan 5, 2017). The fund has returned 23.0% in a year. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

iShares Core MSCI EAFE ETF IEFA

This fund is a low-cost ETF that seeks to provide exposure to a wide range of companies in the Europe, Australia, Asia, and the Far East region (EAFE). It garnered $20.9 billion in inflows in 2017.

It has AUM of $43.7 billion and charges a fee of 8 basis points a year. From a geographical perspective, the fund has high exposures to Japan, UK and France with 25.1%, 17.6% and 9.7% allocation, respectively (as of Jan 5, 2018). From a sector look, the fund has high exposures to Financials, Industrials and Consumer Discretionary with 19.7%, 15.7% and 12.8% allocation, respectively (as of Jan 5, 2018). The fund’s top three holdings are Nestle SA (SIX:NESN), HSBC Holdings (LON:HSBA) PLC and Novarits AG with 1.5%, 1.1% and 1.1% allocation, respectively (as of Jan 5, 2017). The fund has returned 27.3% in a year. It has a Zacks ETF Rank #3 with a Low risk outlook.

Vanguard FTSE Developed Markets ETF VEA

This fund is a low-cost ETF that seeks to provide exposure to developed markets outside the United States. It garnered $17.5 billion in inflows in 2017.

It has AUM of $70.6 billion and charges a fee of 7 basis points a year. From a geographical perspective, the fund has high exposures to Japan, UK and Canada with 22.2%, 15.3% and 8.1% allocation, respectively (as of Nov 30, 2017). From a sector look, the fund has high exposures to Financials, Industrials and Consumer Discretionary with 21.0%, 15.0% and 13.0% allocation, respectively. The fund’s top three holdings are Nestle SA, Royal Dutch Shell (LON:RDSa) PLC and Samsung Electronics (KS:005930) Co. Ltd with 1.3% allocation each (as of Nov 30, 2017). The fund has returned 27.0% in a year. It has a Zacks ETF Rank #3 with a Low risk outlook.

iShares Core MSCI Emerging Markets ETF IEMG

This fund is a low-cost ETF that seeks to provide exposure to emerging market companies. It garnered $16.6 billion in inflows in 2017.

It has AUM of $45.7 billion and charges a fee of 14 basis points a year. From a geographical perspective, the fund has high exposures to China, South Korea and Taiwan with 28.2%, 15.2% and 11.9% allocation, respectively (as of Jan 5, 2018). From a sector look, the fund has high exposures to Information Technology, Financials and Consumer Discretionary with 25.7%, 21.1% and 10.9% allocation, respectively (as of Jan 5, 2018). The fund’s top three holdings are Tencent Holdings Ltd, Samsung Electronics Ltd and Alibaba (NYSE:BABA) Group Holding ADR with 4.9%, 3.7% and 3.4% allocation, respectively (as of Jan 5, 2017). The fund has returned 39.4% in a year. It has a Zacks ETF Rank #3 with a Medium risk outlook.

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