Published December 10, 2012
Exchange traded funds raked in $15.6 billion in fresh investments last month as bond funds continued to be asset-gathering leaders. Year-to-date ETFs have attracted $154 billion in new assets, putting the industry on pace to eclipse the 2008 record, according to Morningstar (NASDAQ: MORN). In 2008, ETFs hauled in $168.3 billion in assets.
Bond funds continue to impress. Inflows to the group totaled $3.8 billion last month and stand at $48 billion, "surpassing any previous year," Morningstar analyst Michael Rawson said in a note.
Not surprisingly, the PIMCO Total Return ETF (BOND), which debuted earlier this year, has been the leader among bond ETF inflows this year. Colloquially known as the Bill Gross ETF, BOND raked in $450 in fresh investments last month and is on pace to top $4 billion in AUM this year, Morningstar noted. BOND is now the largest actively managed ETF and the second to top $1 billion in AUM. The first was the WisdomTree Emerging Markets Local Debt Fund (ELD).
Speaking of emerging markets bond ETFs, the Morningstar data is supportive of an often discussed topic: Surging inflows to this asset class. ETFs tracking emerging markets debt attracted $774 million in assets last month to bring the year-to-date total to $5.4 billion.
Inflow leaders among emerging markets bond ETFs this year are spread across the group and include dollar-denominated funds such as the PowerShares Emerging Mearkts Sovereign Debt Portfolio (PCY), the Market Vectors Emerging Markets Local Currency Bond ETF (EMLC) and the iShares Emerging Markets Local Currency Bond Fund (LEMB).
Morningstar noted emerging markets ETFs, including funds ranging from the iShares MSCI Emerging Markets Index Fund (EEM) to the iShares FTSE China 25 Index Fund (FXI) to the WisdomTree India Earnings ETF (EPI), were on the receiving end of robust inflows in November. As a group, diversified emerging markets funds such as EEM attracted over $1.8 billion in assets last month.
Investors continue to low volatility ETFs as well. Morningstar points out the iShares MSCI Emerging Markets Minimum Volatility Index Fund (EEMV) attracted $86 million in fresh assets in November. The PowerShares S&P 500 Low Volatility (SPLV), already the largest low volatility equity ETF by assets, gained $352 million in assets last month.
Among issuers, the big three of iShares, State Street Global Advisors and Vanguard were the big three in terms of inflows last month. Year-to-date, iShares ETFs have gained $47.2 billion in assets, putting the firm just ahead of Vanguard's $46.8 billion in inflows, according to Morningstar data. State Street Global Advisors, the second-largest U.S. ETF sponsor in between iShares and Vanguard, has attracted $23.7 billion in new investments this year.
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