Passive investing: July 2020 was a “monster month” with $48 billion inflows into ETFs

$48 billion moved into U.S.-listed ETFs during the month of July. Find out about the major winners and losers in this blog post.


According to www.etf.com, the month of July record inflows into ETFs has lifted the year-to-date tally to $252 billion, well ahead of last year’s $153 billion at this time.
Should strong inflows persist into the second half of the year, 2020 could very well beat the yearly record of $452 billion of new assets was set in 2017 (by the end of July 2017, $274 billion had been registered).

Total assets in U.S.-listed ETFs stand at $4.6 trillion. As shown on the chart below, the shift from active to passive remains a persistent trend.

Chart: The shift from Active to Passive instruments (source: Investment Company Institute)


A_active vs passive-1


A closer look to July 2020 flows

 

Last month $48 billion inflow wasn’t led by US equity ETFs – although the asset class gathered another $3.9 billion. U.S. fixed income led all asset classes, attracting $25.4 billion, followed by commodities at $7.8 billion and international equity with $7.3 billion – see details below.

Table: July 2020 ETF Net flows by asset classes (source: www.etf.com)
etf asset classes flows july
Since the start of the year, U.S. fixed income has pulled away from U.S. equity in total new assets, with $117.6 billion versus $75.5 billion.

 

However, we note that when looking at the cumulative flows as a percentage of Assets under Management, Commodity ETFs are currently enjoying the strongest momentum, mainly thanks to Precious metals ETFs.

Chart: Cumulative flow into ETFs as a % of AUM as of August 5th (source: JP Morgan)

ETF flows-1



Gold ETF recorded the largest inflow in July



The physically backed SPDR Gold Trust (GLD) led July inflows, with $3.7 billion, bringing its year-to-date total to $19.2 billion. Its competitor, the iShares Gold Trust (IAU), held down the sixth spot, with $2.2 billion.


The second spot goes to a fixed income ETF, the iShares Core U.S. Aggregate Bond ETF (AGG) which attracted $3.47 billion of net inflows in July. This ETF now stands at nearly $80 billion AUM.

 

The Vanguard Total Bond Market ETF (BND) saw $2.1 billion in inflows. Investment grade bonds ETFs were not the only one to gather assets. The high yield funds iShares iBoxx USD High Yield Corporate Bond ETF (HYG) and SPDR Bloomberg Barclays High Yield Bond ETF (JNK) took in $2.77 billion and $2.15 billion, respectively.

 

The only equity ETF on the top of the inflows chart was the Vanguard Total Stock Market ETF (VTI), with $1.8 billion.

The Top list of inflows for the month of July is shown below.


Table: July 2020 ETF Top Gainers (source: www.etf.com)

largest etf inflows july

When it comes to redemptions, the iShares 7-10 year Treasury Bond ETF (IEF) topped the outflows chart, with minus $1.73 billion in assets. The SPDR Bloomberg Barclays 1-3 Month T-bill ETF (BIL) saw $1.5 billion in outflows, and the iShares Short Treasury Bond ETF (SHV) lost $1.4 billion in assets.

 

The two world’s largest ETFs, both equities, also saw outflows, as investors grew cautious about stocks that continue to post new all-time highs. The SPDR S&P 500 ETF Trust (SPY), with $287 billion in AUM, saw $872 million in outflows, and the Vanguard S&P 500 ETF (VOO), which has $153 billion in AUM, lost $1.39 billion in assets.

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