If first five months of the year were any indication of trends or major themes, then it is that the market can price in risk and reverse them instantly. The net ETF issuance for the period ending January 1, 2018 to May 30, 2018, registered approximately $113 billion in inflows across all asset classes.

According to data from The Investment Company Institute (ICI), the month of May saw largest inflow in net issuance since January. However, the money is being allocated to taxable bonds as taxable bond ETFs has seen, significant, increased inflows in the last two months (see table below).  Similarly, municipal bond ETFs have also risen in net inflows relative to earlier in the year. 

U.S. Equity ETFs in the month of May has posted its first inflow since Janaury, as well, as investors allocated capital back to this asset class. World Equity ETF net flows, on the other hand, were still weak relative to earlier in the year but were positive and has been on an increasing trend since March of the year. 

Hybrid ETFs saw its first outflow in May with almost $4 billion in net outflows in this asset class.

Overall, net inflows from taxable and municipal bond etfs point to increased investor demand on the fixed income segment as interest rates rise. Our research has presented the net flows by quarter over the various asset classes, see graph below; the net inflows,into the ETF space, of nearly $113 billion, for the five months ended May 30, 2018, further indicates that capital is moving into the exchange traded funds from numerous sources, including mutual funds.  

ETFHeatMap Research

 

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