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ETFs Start Year Fast With $245 Billion of Flows in First Half

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Exchange-traded funds listed in the U.S. garnered $245 billion of inflows in the first half of 2017, the best start of a year in the industry’s 24-year history, according to State Street Global Advisors.

SSGA’s latest ETF flash flows report said the inflows equated to nearly 10% of assets under management at the start of this year, well ahead of the previous highest percentage gain of 7% in 2012.

After a record-setting 2016, when they flirted with the $100 billion mark for the first time, fixed income ETFs are on pace to shatter all records this year after accumulating flows of $70 billion in the first half, according to the report.

SSGA said this had to do both with investors seeking low-cost, efficient beta exposures to manage duration or seek income opportunities against a low and oscillating rate environment, and seeking to bolster portfolios in the event of equity drawdowns or geopolitical tail risks.

For their part, equity ETFs amassed $172 billion in the January-to-June period, half of the previous 12-month inflows.

International funds experienced their best-ever yearly start with more than $80 billion of inflows in the first six months of this year, including some $20 billion deposited into international ETFs in June.

SSGA said the shift overseas was broad based, with flows into emerging market funds topping $10 billion for the second consecutive quarter.

It noted, however, that even though international flows have topped the U.S. in 2017, U.S.-listed products lead over the last 12 months, a period that encapsulates significant post-election exuberance.

On the sector level, investors have favored technology, financials and health care ETFs, which attracted $5.3 billion, $3.8 billion and $3.2 billion, respectively, in the first six months of the year.

Materials, utilities and telecoms experienced outflows over the same period.

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