U.S. ETF Inflows Continue Increase in July

August 11, 2011 (PLANSPONSOR.com) - June saw the U.S. exchange-traded fund industry rebound with net inflows of $9.8 billion, and July saw that trend continue as U.S. ETFs rallied, bringing in $17.2 billion.

Morningstar reports that year-to-date inflows are roughly 60% higher than this time last year. Total ETF assets have increased roughly 25% in the trailing 12 months and closed July at $1.105 trillion, up 0.82% month over month.  

U.S.-stock ETFs provided the largest ETF asset-class level inflow for the second consecutive month. Since U.S.-stock flows fell into the red in March, there seemed to have been a loss of trend. Following May’s $2.7 billion outflow, however, flows have not only landed in the black, but also increased each month. U.S.-stock offerings posted a $3.2 billion inflow in June and followed with a $6.4 billion inflow in July.  

Across the size/style paradigm, large-blend offerings collected the largest sum, racking up $4.7 billion in net inflows. The category was followed by its growth counterpart, which saw inflows of $2.2 billion last month. July’s most substantial outflows came from the small-blend category, which bled a sizeable $1.5 billion.  

Although Vanguard led the pack for the prior two-month period, the provider was bested in July by SSGA’s inflows of nearly $5.6 billion. iShares, the largest U.S. ETF provider, seems to have established a trend of inflows over the past several months. Following May’s $4 billion outflow and June’s $550 million inflow, the ETF behemoth saw a much more robust $3.5 million inflow in July. Despite its dominance in the space, iShares’ market share continues to shrink over time. Market share figures for iShares are down nearly 4% year over year.  

While U.S.-stock ETFs saw the single largest asset-class-level inflow, a number of noteworthy U.S.-stock offerings claimed all of last month’s top-five ETF outflows. iShares Russell 2000 Index IWM was cut the deepest, shedding $1.4 billion last month. The fund was trailed by the iShares S&P MidCap 400 Index IJH, which lost $618 million. The market indicated a flight from smaller and more refined exposures, as the Energy Select Sector SPDR XLE, Industrial Select Sector SPDR XLI, and Consumer Discretionary Select Sector SPDR XLY claimed the third-, fourth, and fifth-largest ETF outflows. They gave up $527 million, $387 million, and $321 million, respectively. The largest inflows to U.S.-stock ETFs came to SPDR S&P 500 SPY and PowerShares QQQ Trust QQQ, which saw inflows of $3.1 billion and $1.6 billion, respectively. SPY and QQQ claimed the first- and third-largest ETF inflows, respectively.  

The Morningstar report is at http://corporate.morningstar.com/us/documents/FundFlows/FundFlowsAug2011.pdf.