By Gaurav Dogra
– Global exchange-traded funds (ETFs) drew record inflows last year as investors plowed their growing cash balances into the low-cost, transparent investment products.
According to Refinitiv Lipper data, global exchange-traded funds received a record $1.22 trillion in inflows last year, which was about 71% higher than the previous year. Their net assets swelled to a record $9.94 trillion. That still pales in comparison to the assets under management of mutual funds at about $43.8 trillion.
U.S. ETFs were the biggest recipients, receiving $901 billion, while European and Asian ETFs drew about $190 billion and $88 billion respectively.
Money flows into global ETFs https://fingfx.thomsonreuters.com/gfx/mkt/zdvxoqeropx/Money%20flows%20into%20global%20ETFs.jpg
Alan Kelly, global head of ETF Services at financial services provider Apex Group, said the higher inflows into ETFs were due to their lower expenses, higher returns and transparency, compared with traditional mutual funds.
He added that the emergence of ETFs focused on recent popular themes such as cryptocurrencies, and on environmental, social and governance (ESG) themes would bolster further flows this year.
Global equity ETFs delivered returns of 14.8%, compared with equity mutual funds’ gain of 11.6% last year. Commodity and bond ETFs also surpassed the gains of their mutual fund counterparts last year, according to the data.
ETF and mutual funds returns https://fingfx.thomsonreuters.com/gfx/mkt/lbpgnjankvq/ETF%20and%20mutual%20funds%20returns.jpg
Thanks to the popularity of ETFs, fund houses around the world launched 1,334 new ETFs in 2021, more than twice the number in 2020.
Fund flows into global ETFs and mutual funds https://fingfx.thomsonreuters.com/gfx/mkt/akpezekzwvr/Fund%20flows%20into%20global%20ETFs%20and%20mutual%20funds.jpg
“Active asset managers are increasingly using ETFs to gain long-term exposure to megatrends in their strategic allocations: This is no longer a tactical allocation but also core to their portfolios,” said Denis Panel, head of multi-asset, quantitative and solutions at BNP Paribas Asset Management.
“ESG and thematic approaches within index management allow clients to make active investment choices, and give the opportunity for asset managers to express their convictions,” he said.
According to Refinitiv data, global ESG ETFs secured $119.4 billion in inflows last year, compared with $79.3 billion in 2020.
The Vanguard 500 Index Fund ETF and Vanguard Total Stock Market Index Fund ETF attracted over $40 billion each in net buying in 2021, while SPDR S&P 500 ETF Trust secured inflows of $37.55 billion.
Global ETFs with biggest inflows in 2021 https://fingfx.thomsonreuters.com/gfx/mkt/zgpomadrnpd/Global%20ETFs%20with%20biggest%20inflows%20in%202021.jpg
(Reporting by Gaurav Dogra; additional Reporting by Patturaja Murugaboopathy in Bengaluru; Editing by Vidya Ranganathan and Jonathan Oatis)