2016 saw continued positive net flows into exchange-traded
funds (ETFs), as assets reached $2.5 trillion at year end. With net inflows of
$269 billion, 2016 surpassed 2014’s previous high of $229 billion and marked
the third consecutive year with inflows north of $200 billion. The majority of
these inflows came during the last two quarters, with $202 billion (75%) of
flows occurring during that time.
Accounting for 16% of ETF assets at the beginning of 2016,
fixed-income funds garnered a proportionally high percentage of flows for the
year, bringing in 31% of net new flows. The $83 billion of inflows for the year
represented the most productive single year for fixed-income ETFs thus far.
Only in 2009 and 2011 did fixed-income funds bring in a greater share of total
net flows. Intermediate-term bond and corporate bond were the top two selling
fixed-income categories for the period.
U.S. equity funds led the charge, reaping $173 billion in
net new flows last year, due to healthy flows into the large blend and large value
categories. Internationally, strong flows for both diversified emerging markets
and foreign large blend funds were largely offset by significant outflows in
Europe- and Japan-focused stock funds. ETF launches for the year were
concentrated in sector-specific equity (56), international equity (55), and
U.S. equity (51).