US ETF Inflows Hit A Record $188B In 2012; Contrarian Indicator or Middle of Bull Run?

Courtesy of Mish.

Index Universe reports US ETF Inflows Hit A Record $188B In 2012

Investors poured a record $188 billion into U.S.-listed ETFs in 2012, eclipsing a previous record of more than $175 billion in 2008, as a variety of asset classes shined—including domestic as well as international equities, and particularly fixed income.

Overall, total ETF assets ended the year at almost $1.349 trillion, 27 percent higher than the $1.062 trillion a year earlier and 2 1/2 times as much as the $537 billion total at the end of 2008, according to data compiled by IndexUniverse.

The 2012 year-end asset total, just shy of an all-time record of $1.350 trillion reached on Thursday, Dec. 20, also reflects the rise in global stock markets, including a 7.3 percent increase in the Dow Jones industrial average in all of 2012.

To The Giants Go The Spoils

Of the $188 billion in 2012 inflows, $151 billion, or 80 percent of the total, came from the three biggest firms: BlackRock’s iShares, State Street Global Advisors and Vanguard.

The dominance of bigger firms is by now a familiar tale in the U.S. ETF industry, which began about 20 years ago with the launch of SSgA’s SPDR S&P 500 ETF (SPY).

In that light, it’s no surprise that last year’s asset-gathering winner was SPY, the biggest ETF in the world. It pulled in $15.77 billion, or more than 8 percent of the total asset haul.

Overall, bond funds pulled in around $56 billion, or about 30 percent of the total asset haul.

More to the point, the nearly $44 billion that flowed into U.S. bond funds was almost 20 percent of the total, while the nearly $12 billion in new money invested in international bond funds constituted more than 45 percent of the total—both higher percentages than in either U.S. or international equities.

Also, we’ve spilled a bit of ink this year on the Nos. 2 and 3 funds: the Vanguard MSCI Emerging Markets ETF (VWO) and the iShares MSCI Emerging Markets Index Fund (EEM).

They both gathered about $10.5 billion, with the lion’s share of EEM’s asset haul occurring after Oct. 2, when Vanguard announced that next year it will abandon the MSCI index VWO has shared with EEM in favor of a benchmark created by FTSE.