China and Greece, among other factors, challenged investors desire to be long equities in July, but problems in international markets and lingering fears that U.S. interest rates are set to rise did not keep cash from piling into exchange traded funds.
In fact, the asset-gathering pace being set by U.S.-listed ETFs through the first seven months of 2015 is well ahead of prior years. U.S.-listed exchange traded products (ETPs), including ETFs and exchange traded notes (ETNs), are adding net new assets (NNA) at clip that is eight percent ahead of previous years, according to ETFGI, a London-based ETF research firm.
Through the first seven months of 2015, ETPs trading in the U.S. have added $125.1 billion in new assets, topping the seven-month record of $115.9 billion set in 2013, notes ETFGI.
With the U.S. dollar soaring, investors have strongly favored international ETFs over domestic equity funds this year. Year-to-date, eight of the top 10 asset-gathering ETFs are international funds, including three currency hedged ETFs – the WisdomTree Europe Hedged Equity Fund HEDJ, the Deutsche X-trackers MSCI EAFE Hedged Equity ETF DBEF and the WisdomTree Japan Hedged Equity Fund DXJ.
HEDJ and DBEF have added nearly $28 billion in new assets on a combined basis this year. Underscoring investors' affinity for HEDJ and DBEF is this anecdote: The next five ETFs among the top 10 asset gatherers would need to be combined to arrive at an inflows total that comes close to the new assets added by HEDJ and DBEF.
“The S&P 500 index ended up 2% for the month of July and finished the first seven months of 2015 up 3%. Although investors faced uncertainty in China and Greece during July they continued to invest significant net new assets in equity ETFs”, said Deborah Fuhr, managing partner of ETFGI.
Last month, combined assets under management for the world's ETPs eclipsed the assets held by hedge funds. The more than 5,800 exchange traded products listed around the world have a combined $2.971 trillion in assets under management, just ahead of combine AUM of $2.969 trillion for hedge funds, according to ETF Trends.
In July, BlackRock's BLK iShares, the world's largest ETF issuer, added $7.5 billion in new ETF assets followed by State Street's STT State Street Global Advisors at $5.3 billion, according to ETFGI. Vanguard, the second-largest U.S. ETF sponsor, added $4.5 billion. WisdomTree WETF the fifth-largest U.S. ETF issuer, and Deutsche Bank's DB Deutsche Asset & Wealth Management rounded out last month's top five asset gatherers with inflows of $1.2 billion and $997 million, respectively.
Year-to-date, the top five asset-gathering ETF issuers are, in order, iShares, Vanguard, WisdomTree, Deutsche Asset & Wealth Management and First Trust, according to ETFGI.
Among the top 10 asset-gathering ETFs as of Aug. 6, Vanguard has four, more than any other issuer, followed by three for iShares. WisdomTree has two, HEDJ and DXJ; while Deutsche Asset & Wealth Management has one, DBEF.
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