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Like a lion: Roaring ETFs on pace for $500 billion this year

  • ETFs have amassed $170 billion so far in 2017.
  • ETFs are on pace for $500 billion for the full year.
  • ETFs are taking in, on average, $1.3 billion a day and $40 billion monthly.

For fund flows, April came in like a lion, and went out... like a lion.

ETF flows, which have been strong all year, continued strong in April. Roughly $42 billion in net new money came in, which is roughly the same inflow we have seen every month this year. The four month total is now $170 billion, the highest level for inflows in the first four months we have ever seen.

At this pace, we could have a $500 billion dollar year for inflows, which would be a record. It also works out to roughly $1.3 billion a day for ETFs so far in 2017.

"As has been the case the last few months, this was a rising tide lifting all ships. Pretty much all risk on asset classes had strong flows," said Dave Nadig, CEO of ETF.com.

Three sectors saw particularly strong inflows:

  1. Plain-vanilla U.S. ETFs (IVV, VOO), particularly S&P 500 ETFs.

  2. European funds, with a particularly strong month for the iShares MSCI Eurozone ETF (EZU), which increased its assets under management by 10 percent.

  3. Emerging markets, where large funds from iShares (IEMG) and Vanguard (VWO) increased assets by roughly 5 percent apiece.

We also saw money flow back into high yield (HYG, JNK) and their smaller competitors.

Lion
Martin Schutt | AFP | Getty Images

So who's losing? Gold miners. After months of both strong performance and flows, the two flagship gold miners funds (GDX and GDXJ) saw significant outflows. We also saw flows out of financials, "Perhaps investors cooling on the prospect of any significant tax or regulatory changes this year," Nadig told me.

The flip side of the Trump Trade also showed signs of life. Japan and Mexico saw net negative flows, but not anywhere near the big moves seen in the first quarter.

Where do we go from here? With inflows average about $40 billion a month, the ETF business will top $3 trillion in assets under management any day now. It's still a long way from the roughly $16 trillion in assets that the mutual fund industry has, but the trend has been unmistakable for years.

One thing's for sure: The big just keep getting bigger. There are roughly 50 ETF providers, but the top five — BlackRock's iShares , Vanguard, State Street, Invesco PowerShares and Schwab — together account for over $2.5 trillion of the roughly $2.9 trillion in assets. That means five companies control roughly 85 percent of ETF assets. And the concentration is intense even among ETFs. There's nearly 2,000 on the market, but the top 10 ETFs alone account for roughly 25 percent of the entire market.

Are there any problems with this concentration? Nadig doesn't think so, not yet: "No one complained when Fidelity was the biggest money manager in the world, and just because Blackrock is now the biggest ETF provider in the world I don't think that is a big issue."

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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