What's Behind The ETF Industry Pulling Record High In June?

The ETF industry is witnessing phenomenal growth this year with assets invested under global ETFs/ETPs touching a record high of $3.177 trillion in June. As per data from ETFGI’s June 2016 global ETF and ETP industry insights report, inflows were witnessed across the globe with record levels of assets being gathered in Japan ($147.67 billion) and Canada ($79.14 billion) (read: 1H ETF Asset Report: Gold Glows; Equities Fade).

ETFs/ETPs listed in the U.S. also witnessed an encouraging trend. Assets under management reached a new high of $2.256 trillion at the end of June 2016. The U.S. ETF/ETP industry had a whopping 1,931 ETFs/ETPs from 97 providers on 3 exchanges at the end of the month.

In terms of inflows, during June, domestic ETFs/ETPs gathered net inflows of US$17.72 billion. Average daily trading volume saw a sequential upswing of 24.2% to $85.61 billion in June 2016 from $68.90 billion in May 2016. While equities were not very impressive in the ETF space, fixed income led the way followed by commodity.

Global growth slowdown, geopolitical turmoil and high broad-based volatility were haunting the markets ever since the start of the year. However, fears of a Brexit made June a particularly volatile month. Investors were on an edge about the potential impact a “leave” vote would have on the world economy (read: Volatility ETFs: Buy or Sell Now?).

Below we have discussed a couple of areas which saw the highest inflow last month.

Bond ETFs

The bond market space is on a tear and has emerged as the preferred choice in an economic climate marked by high levels of volatility. As per US ETF Flash Flows report from State Street Global Advisors, fixed income ETFs attracted $8.3billion during the month of June. This brought year-to-date inflows to nearly $50 billion, almost double of what we saw this time last year (read: Brexit Fuels a Global Rally in Bond ETFs).

Popular funds which saw significant inflows were iShares Core U.S. Aggregate Bond ETF (AX:AGG) – $1.49 billion, iShares iBoxx $ Investment Grade Corporate Bond ETF LQD – $651 million and Vanguard Total Bond Market Index Fund (AX:BND) – $667.7 million.

Gold ETFs

Gold touched a new two-year high earlier this month. As per US ETF Flash Flows report from State Street Global Advisors, gold ETFs attracted over $14 billion in the first half of 2016, marking the highest inflows in the first six months ever. Helping gold’s cause further was the Brexit vote held late last month, which drove investors to safe-haven assets. Gold ETFs recorded inflows of almost $800 million on the day U.K. took the world by surprise by voting in favor of leaving the EU (read: Gold ETFs Shine on Brexit Woes)

Gold bullion ETF SPDR Gold Shares (NYSE:GLD) (LAGOS:GLD) recorded massive inflows of $3.5 billion in June. The fund is up almost 26.5% so far this year (as of July 13, 2016).

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SPDR-GOLD TRUST (GLD): ETF Research Reports

ISHARS-IBX IG (LQD): ETF Research Reports

ISHARS-CR US AG (AGG): ETF Research Reports

VANGD-TOT BOND (BND): ETF Research Reports

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Zacks Investment Research