ETP Fund Flows Hit $1 Trillion Record as Global Assets Rally

(Bloomberg) -- In a year already packed with superlatives, the fund industry has a new milestone to celebrate.

Inflows into exchange-traded products across the world have just surpassed $1 trillion in 2021, according to data compiled by Bloomberg. The $3.9 billion added by investors in the latest data carried the sum past the magic mark.

Even with two months left to go, 2021 marks the first calendar year where ETPs have reeled in over $1 trillion. A record-topping rally in the stock market and soaring commodity prices have helped propel a more than 30% increase over last year’s all-time high. An ETP is the catch-all term for a family of products including ETFs that can track the performance of stocks, bonds, commodities or currencies.

“Although it’s a new record, I can’t say I’m surprised,” said Liz Young, head of investment strategy at SoFi. “One, we’ve had this huge wave of TINA -- there is no alternative -- so people are just hungry for equities. And two, we have a lot of new entrants into investing, and people are cost conscious. So when they’re DIY-investing and they’re on a platform trying to save on commission, an ETF is a lot cheaper than a mutual fund.”

Equity funds have taken the lion’s share of the global ETP flows. Year-to-date inflows into ETFs have topped $735 billion, with U.S. funds accounting for $540 billion of those. Historically low interest rates have also forced many investors to rethink the traditional 60/40 stock-bond allocation strategy and allocate more to equities. As a result, fixed income funds have raked in in just under $234 million so far in 2021. 

The Vanguard S&P 500 ETF (ticker VOO) is by far the biggest winner for flows this year, luring $44.5 billion so far. The biggest loser is the iShares MSCI USA Min Vol Factor ETF (USMV), which has seen about $8 billion exit.

The S&P 500 recorded its best October in six years and some strategists are forecasting continued gains into the year end after strong corporate earnings in the U.S. That could lead to even more inflows.

©2021 Bloomberg L.P.