Stocks and bonds finally caught a break in July. After months of relentless selling, both asset classes caught a bid amid hopes that inflation may be peaking and the Federal Reserve may slow the pace of interest rate hikes in the coming months.
Those hopes translated into a strong level of inflows for ETFs. On net, $39.1 billion flowed into U.S.-listed ETFs during the month of July, most of which went into U.S. stock and bond ETFs.
And $10 billion went into U.S. equity ETFs, while $27.9 billion went into U.S. bond ETFs, pushing overall year-to-date inflows for U.S.-listed ETFs to $342.8 billion. Combined with the rise in asset price, AUM climbed to $6.55 trillion.
Those numbers compare with $520.3 billion and $6.6 trillion, respectively, for the same period in 2021.
Second-Best Year for Inflows
This year’s solid ETF inflows in the face of a bear market for both equities and fixed income are remarkable. As FactSet Director of ETF Research Elisabeth Kashner wrote last week, 2022 inflows are on track to exceed all annual inflows records, with the exception of 2021.
“First half 2022 flows of $332 billion exceed full-year levels for every year from 1993-2016, nearly match full-year 2018 and 2019 flows, and equal 64% of full-year 2020 flows. While global investors offload stocks and bonds, ETF customers have been buyers,” she noted. “ETF inflows have likely come from long-term investors, also known as the buy-and-hold crowd. Tactical investors have shifted their attention to bond ETFs. The fear-of-missing-out (FOMO) buyers made their presence known by crowding into 3x leveraged ETFs—and paid dearly.”
Inflows for Broad Market Stock ETFs
July’s ETF inflows reflect Kashner’s observation that the majority of money entering ETFs this year is coming from long-term investors.
The top asset gatherers during the month included the Vanguard S&P 500 ETF (VOO) and the iShares Core S&P 500 ETF (IVV).
On the fixed income side, the iShares U.S. Treasury Bond ETF (GOVT) and the iShares 20+ Year Treasury Bond ETF (TLT) each pulled in more than $3.7 billion in July.
At the same time, a pullback in commodity prices led investors to take money out of those funds. The SPDR Gold Trust (GLD) shed $2.5 billion in assets, while the commodity ETF category as a whole had outflows of $6.3 billion during July.
For a full list of the top inflows and outflows for July and 2022 as a whole, see the tables below:
Top Gainers (Year-to-Date)
Biggest Losers (July 2022)
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