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Exchange Traded Funds: Q2 2021 Market Overview

22 July 2021

The second quarter of 2021 has yet again seen strong ETF inflows across all asset classes. Total net new assets of $296 billion were driven by $200 billion of equity inflows and $85 billion within fixed income, which puts Q2 2021 slightly under Q1's $349 billion of inflows.

Individual fund flows also show a continuation of trends from previous quarters with Vanguard taking the top 4 spots with a combined $32 billion of inflows across Vanguard Total Stock Market ETF (VTI), Vanguard S&P 500 ETF (VOO), Vanguard Total Bond Market ETF (BND) and Vanguard Value ETF (VTV). The addition of the latter alongside more traditional entrants in our top 10 highlights factor-based ETFs gaining more traction with appearances also from Schwab US Dividend Equity ETF (SCHD) and JPMorgan BetaBuilders Europe ETF (BBEU).

There is no real trend within our 10 largest fund outflows in terms of exposure or strategy although it is noticeable that iShares funds constitute 7 out of the 10 largest fund outflows for the quarter. However, Blackrock still enjoyed $74 billion of overall inflow to place them second behind Vanguard in the overall Flow by Issuer table by absolute values. When looking at Q1 2021 Flow as % of previous AUM the biggest winner amongst the 20 largest issuers is JPMorgan Chase & Co at 15% growth, followed by Van Eck (8%) and First Trust (6%). Ark Investment Management is the only issuer within the top 20 with quarterly outflows as demand for their actively managed thematic ETFs levels off following from their early 2021 success.

Growth and Thematic focused ETFs dominate the total return performance charts this quarter with First Trust Dow Jones Internet Index Fund and ARK Innovation ETF leading the way at 14.5% return over 3 months. These are followed closely by Large Cap Growth ETFs from nearly all of the major issuers at around 13%.

New launches this quarter were dominated by the decision by Dimensional to convert 4 Mutual Funds into ETFS containing approximately $30 Billion in AUM. This trend is expected to continue throughout the coming years and months, following on from the first ever official conversion back in March of 2 of Guinness Atkinson's funds.

Outside of the Dimensional conversions there was another notable launch in the burgeoning cryptocurrency ETF space for the Coinshares Physical Bitcoin ETP (BITC) that has attracted $220 million in AUM by the end of Q2.

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Thomas Runciman, Product Manager, ETF and Benchmarking Solutions

Thomas.Runciman@ihsmarkit.com

IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.


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