10 Most Popular ETFs in 2017

The ETFs with most net inflows to November 30 2017 were a mixed bag, with bond, equity and gold-focused funds catching investors' imaginations

David Brenchley 29 December, 2017 | 8:27AM
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Bonds and global equities were popular hunting grounds for ETF investors this year, according to data from Morningstar Direct.

Bonds and global equities were popular hunting grounds

The Amundi ETF Floating Rate USD Corporate UCITS ETF (AFLT) was the most popular exchange traded fund of 2017, with inflows of €3.2 billion. Another bond-focused offering, iShares JPMorgan EM Local Government Bond UCITS ETF (IEML) in fourth with €2.6 billion inflows.

This comes after data showing fund UK investors were also looking at bonds, though they were more focused on sterling strategic bonds like M&G Optimal Income.

The Amundi ETF tracks the Markit iBoxx USD FRN Liquid Corporates 100 index, giving investors exposure to investment grade US dollar-denominated floating rate notes. FRNs tend to have a variable interest, tied to a benchmark like the US Treasury Bill rate or LIBOR.

But the ETF has underperformed both year-to-date and since inception, gaining just 4.43% since April 2015 launch compared to its index’s 5.23%.

The iShares ETF invests in government bonds issued by emerging market nations in local currency terms. It tracks the JPMorgan GBI – Emerging Market Global Diversified 10% Cap 1% Floor index. Three of its four largest holdings are issued by the Brazilian government.

Global Equities in Favour

The ETFs that saw the second and third most inflows in 2017 have mandates to invest in global equities, as investors seek to participate in what has been an eight-year bull run for world stock markets.

The UBS ETF MSCI ACWI SF ETF (ACGUKD) and iShares Core MSCI World ETF (IWDG) saw €3 billion and €2.7 billion pumped in respectively. Despite having slightly different benchmarks, both have the same top nine holdings, albeit with different weightings. US tech giants Apple (AAPL), Microsoft (MSFT), Amazon (AMZN) and Facebook (FB) account for around 6% of each.

Emerging markets have turned a corner in 2017, powered again by tech gains. And many investors have turned to passive solutions for gains here, against the generally accepted wisdom that active managers perform better in these less-researched regions.

iShares Core MSCI EM IMI ETF (EIMI) and Amundi ETF MSCI Emerging Markets (AEEM) saw inflows of €2.3 billion and €2.2 billion respectively. Both are heavily weighted to the likes of Tencent (00700), Samsung (005930), Alibaba (BABA), Taiwan Semiconductor (2330) and Naspers (NPN).

Ben Gutteridge, head of fund research at Brewin Dolphin, earlier this month told Morningstar he is increasingly coming around to the idea of using passive solutions to gain access to the largest names in the emerging market universe.

Gold, US and Europe

With some commentators predicting a correction in equity markets could be around the corner, it’s been suggested the popularity of bond funds is due to investors looking for so-called safe havens to shelter their spare cash.

A more obvious safe-haven asset class in gold. The lustre of the precious metal may have recently been overtaken by appetite for bitcoin, but European investors are still looking towards bullion. Of course, there is no bitcoin ETF yet.

The Xetra-Gold ETF (4GLD) seeks to replicate, net of expenses, the spot price of gold denominated in US dollars.

Rounding off the top 10 were three regional equity offerings, led by the Lyxor S&P 500 ETF (LYPS) with €1.7 billion of inflows. The Europe-focused iShares EURO STOXX 50 ETF (EXW1) and iShares Core EURO STOXX 50 ETF (CXXS5E) both saw inflows of €1.6 billion.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Alibaba Group Holding Ltd ADR75.27 USD-1.66Rating
Amazon.com Inc183.13 USD-0.34Rating
Apple Inc224.31 USD0.06Rating
iShares Core EURO STOXX 50 ETF (DE)48.67 EUR-1.95Rating
iShares Core EURO STOXX 50 ETF EUR Acc178.34 EUR-0.80Rating
iShares Core MSCI EM IMI ETF USD Acc34.32 USD-1.15Rating
iShares Core MSCI World ETF GBP H Dist910.75 GBX-0.65
iShares JPMorgan EM Lcl Govt Bd ETF$Dist42.89 USD-0.64Rating
Lyxor S&P 500 ETF D EUR52.44 EUR0.65Rating
Meta Platforms Inc Class A476.79 USD0.20Rating
Microsoft Corp437.11 USD-0.74Rating
Naspers Ltd Class N343,602.00 ZAC-2.23
Samsung Electronics Co Ltd79,600.00 KRW0.00Rating
Taiwan Semiconductor Manufacturing Co Ltd970.00 TWD-1.82Rating
Tencent Holdings Ltd364.00 HKD-1.41Rating
Xetra-Gold71.26 EUR1.68

About Author

David Brenchley

David Brenchley  is a Reporter for Morningstar.co.uk

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