| NEW YORK
NEW YORK Jan 3 Investors funneled $375 billion
into exchange-traded funds in 2016, investment manager
BlackRock Inc said on Tuesday, a global record that came
as investors looked to cut costs.
The total, which is preliminary, compares with $348 billion
in 2015 and includes a record $286 billion haul in the United
States, home to the funds' biggest market.
ETFs are a basket of stocks or other assets traded by
individual investors and institutions. Fund managers from
BlackRock to Vanguard and Schwab offer index ETFs that
try to track, not beat, the market. They have sliced management
fees on some funds to as little as $3 annually for every $10,000
managed. All three companies announced price cuts last year.
Those low fees along with other cost savings and
conveniences have helped the more than $3 trillion ETF business
take assets from rival financial products, including actively
managed funds that attempt to beat the market but may fall short
of that goal.
U.S.-based active stock funds recorded $288 billion in
withdrawals in 2016, the largest on record, according to
preliminary Thomson Reuters Lipper data through November.
ETF issuers were also able to draw investors into "smart
beta" products that often attempt to beat the markets but do so
based on a set of rules governing how they invest, rather than a
portfolio manager making those calls. The products can be
pricier for investors than traditional index funds while still
undercutting active managers.
"The fact that we're at new-record inflows with such a slow
start is a pretty strong reversal," said David Perlman, an ETF
researcher at UBS.
Markets started 2016 in bad shape, after the U.S. Federal
Reserve raised rates and as oil prices cratered. Stocks managed
to rebound from a February low, but events including the U.S.
presidential race and the British vote to exit the European
Union kept investors skittish.
Money moved to the perceived safety of the fixed-income
market, and BlackRock's early data showed bond ETFs taking in a
record $115 billion in 2016.
New York-based BlackRock, with $1.3 trillion in global ETF
assets, is the largest provider of such funds, as well as the
world's largest money manager overall. It said its iShares ETF
brand attracted $140 billion during the year.
(Reporting by Trevor Hunnicutt; Editing by Tom Brown)