The Markets March 8, 2017

Vanguard TDFs Were the Best Sellers in 2016

Investors added $96 billion to the portfolios, giving Vanguard a 34% market share.
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Vanguard grew assets in its target-date funds (TDFs) and collective investment trusts (CITs) by $96 billion in 2016, according to Sway Research’s report, “The State of the Target-Date Market: 2017.” Assets in Vanguard’s target-date portfolios reached $449.8 billion at the end of 2016, a whopping 27% increase from the year before, to give Vanguard a 34% share of the $1.3 trillion target-date market.

For all investment managers, assets in target-date portfolios expanded by 20% last year, from $1.11 trillion at the end of 2015 to $1.33 by year-end 2016. CIT target-date assets grew by 29%, from $355 billion to $458 billion, while TDF mutual fund assets grew by only half as much, 16%, from $760 billion to $878 billion.

Sway Research believes that Vanguard’s TDF products benefited from a growing demand for passively managed products. Assets in passively managed target-date portfolios, at $653 billion, now outpace actively managed target-date portfolios, which now stand at $594 billion; hybrid target-date products can claim $89 billion in assets.

“Vanguard was not the only fund company to expand its target-date asset base by $10 billion or more in 2016,” Sway says. “T. Rowe Price increased target-date assets by $24 billion in 2016—the most of any firm with a focus on actively managed target-dates. T. Rowe was followed by Black Rock, which added $16 billion of target-date assets.”

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In terms of the largest growth by percentage, American Funds’ target-date portfolios took first prize, expanding by 40%, or $14 billion. As noted above, Vanguard’s assets in these products grew by 27%. The third-biggest growth in terms of percentage was BlackRock (18%), T. Rowe Price (15%) and Fidelity Investments (8%).

The Markets March 8, 2017

Strong Market Boosted ETF Flows During January

Equity exchange-traded funds (ETFs) garnered the most cash.
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In January, assets in exchange-traded funds (ETFs) around the globe rose by $64 billion, according to Strategic Insight’s Global ETF FlowWatch. Equity ETFs received the strongest inflows, $25 billion, followed by bond and commodity ETFs, garnering $17 billion and $2 billion, respectively.

Strategic Insight attributes the strong flows to the “robust expansion of the U.S. stock markets.”

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Worldwide, by the end of January, ETF assets stood at nearly $3.66 trillion.

In the U.S. equity ETFs attracted $27 billion of new flows, and bond ETFs recorded $14 billion in net new cash invested. By category, bond ETFs attracted most of the month’s net flows, nearly $9 billion, followed by equity-mid/small cap and equity-global large cap, which took in $8 billion and $6 billion, respectively.

In Asia, ETFs had $9 billion of net flows, primarily driven by Equity Japan ETFs, which amassed primarily all of the net flows. In Europe, ETFs enjoyed $13 billion of inflows, with equity ETFs taking in the lion’s share of $8 billion.

Among new ETF launches in January, the Source Bloomberg Commodity UCITS ETF A USD was the best-seller, accumulating $873 billion worth of interest from investors. This ETF tracks the Bloomberg Commodity Index.

The full FlowWatch analysis is available from www.sionline.com.

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