Wednesday, January 3, 2018

Turning the Page

Wednesday January 3, 2018 – Happy New Year from all of us here at ETF Global! Looking back, 2017 marks another monumental year for Exchange-Traded-Funds with giant leaps in both the number of products and asset flows.  ETFs gained $476 billion in net inflows, bringing U.S. ETF assets under management to $3.4 trillion and more than 2,000 products.

Stock markets rose steadily around the globe this year, with international stocks even outperforming U.S. stocks for the first time in almost a decade. The Dow Jones Industrial Average rose more than 5,000 points, its largest ever point gain in a calendar year. All other major U.S. indexes recorded solid gains, with large-cap stocks generally performing better than smaller-caps. Additionally, it was also the ninth straight year of positive total returns for the S&P 500. Improving global economic growth and rising corporate earnings are the food that feeds the bull market but we expect its pace to slow from a trot to a walk.

As expected from the shortened and quiet holiday week, markets saw little change in the final week of 2017.  In regards to the overall developments within the ETF landscape, we would like to highlight some interesting developments. As we all know Blackrock leads in ETFs, but Vanguard is coming in hot with the firm’s long history in traditional index funds and actively managed low-cost options. Vanguard has taken well over $350 billion in total assets through December beating out most other issuers by extraordinary figures. The most popular fund this year in terms of inflows, the iShares Core S&P 500 ETF, is one of the most plain vanilla funds on the market, offering exposure to the primary U.S. equity-market benchmark yet it amassed some $30.2 billion in assets.

Our proprietary research also pointed to some interesting trends: internationally and commodity focused ETFs turn up the heat within the ETF Global Quant Movers, a surprise considering the recent passing of the largest tax reform in several decades. Honorable mentions include iShares Core MSCI Emerging Markets ETF, iShares MSCI Poland Capped ETF, and PowerShares FTSE International Low Beta Equal Weight Portfolio all seeing gains a little more than 10 points within the Quant Total Score. Losers include specialty focused US ETFs such as First Trust Nasdaq Semiconductor ETF and SPDR MSCI ACWI Low Carbon Target ETF. The top-rated ETFs within ETFG Quant are IBB and FNI both saw approximately a 25% gain over this past year and have been consistently rated as the top funds.

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