The MarketsMarch 10, 2011

ETF Inflows Driven by Demand for U.S. Equity ETFs

Strategic Insight, an Asset International company, estimates that investors added $6 billion to U.S. exchange-traded funds (ETFs) in February 2011, the sixth straight month of positive flows.

Reported by Rebecca Moore

Flows were driven mostly by demand for U.S. equity ETFs (growth funds). Bond ETFs – including muni-bond ETFs – saw net inflows, too.

According to Loren Fox, senior research analyst at Strategic Insight, SI data showed equity ETF flows in February were $4.6 billion, bond ETF flows were $850 million, and currency ETF flows were $144 million.

Net inflows in February were led by natural resources equity ETFs and commodity ETFs – supported by rising oil prices over the course of February. Diversified international emerging markets equity ETFs saw the biggest net outflows in February, sparked by a drop in emerging-markets fund performance and by rising fears of inflation.

“At the end of February, U.S. ETF assets stood at a record $1.05 trillion – up from $1.01 trillion at the end of 2010. The consistent appeal of ETFs is remarkable. It is just a matter of when, not if, U.S. ETF assets reach $2 trillion,” Fox said in a press release.