As another year of living with COVID-19 draws to a close, David Mann, Head of Global Exchange-Traded Funds (ETFs) Capital Markets, looks back on how the industry has fared in 2021—and how his prior predictions have unfolded.
The more things change, the more they stay the same. I would like to think that 2021 was better than 2020; however, I am still crafting these blogs from my house as COVID-19 stubbornly remains in the news. Hopefully everyone is staying safe and healthy and can find time to have a relaxing holiday season! Now on to business.
Last year, I was amazed that the ETF industry brought in almost $500 billion of net inflows. Well, 2021 blew that number out of the water! With a little over a week to go in the year, the net ETF inflow number stands at $860 billion in the United States.1 Impressive! In 2022, I might be writing about our first $1 trillion year! As to how those flows impacted my 2021 predictions, read on.
Prediction #1: ETFs that hold international equities will account for over 50% of 2021 equity inflows.
When I last checked back in July, this number was at ~40%. My confidence in the pick was running high! Unfortunately, there were a ton of flows into ETFs that hold US equities over the last six months. The final percentage of equity flows that came from ETFs holding international stocks was 32%.2
Despite nearly $200 billion flowing into international equity ETFs over the past 12 months, the percentage was lower than I expected because of all those domestic equity flows. In hindsight, I would have been far more accurate predicting a net inflows number instead of a percentage. The overall spirit of the prediction still stands—very strong flows into international equity ETFs. I will give myself some credit for that with a C+.