Stock market ETFs are attracting a record-setting level of investor cash

Key Points
  • Stock-based ETFs in the U.S. are on track to pull in $300 billion in 2017.
  • For perspective, that's more than the entire $3.4 trillion ETF industry ever has seen in a single year.
  • Investors have concentrated money this year in U.S. funds, which have pulled in $146.9 billion. Global equities have attracted $12.3 billion in fresh cash.
Pedestrians pass in front of the New York Stock Exchange.
Michael Nagle | Bloomberg | Getty Images

A market that already has broken a multitude of records is about to set another one — this time for cash poured into stock-based funds.

Equity exchange-traded funds are on track to pull in $300 billion this year, after another solid showing in November. The month saw $30.6 billion in inflows, taking the running total for 2017 up to just shy of $294 billion, according to State Street Global Advisors.

For perspective, that would bring the total inflows for stock-based ETFs alone to more than the entire $3.4 trillion industry has ever taken in during a year.

A market that has seen 64 record closing highs for the Dow industrials is also seeing plenty of participation from investors.

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Matthew Bartolini, head of SPDR Americas Research for State Street, said the rush to the market, not to mention the low volatility level, is all the more remarkable considering how much geopolitical turmoil investors have had to stomach this year.

"Investors may be uncomfortable in this type of snow globe world," Bartolini wrote in his monthly ETF analysis. "But given the strong macro case underpinning the current market, investor participation will likely stay high, as it seems that no matter how hard the snow globe is shaken, the storm always clears and the underlying scene remains tranquil and untouched."

Investors have concentrated money this year in U.S. funds, which have pulled in $146.9 billion. However, as a percentage of assets, global equities actually have done better, getting $12.3 billion in fresh cash, representing about 40 percent growth. U.S. equity assets have grown about 10 percent by comparison.

Bartolini attributes the hunger for global funds to more attractive valuations, improving earnings, synchronized global growth and central banks that remain loose while the U.S. Fed tightens up.

From a sector perspective, technology led both in November and for the year, gaining $2.8 billion in the month for a 2017 total of $12.7 in inflows ahead of its recent pullback. Financials are next, followed by real estate. By size, large-cap stocks have led 2017 with $71.7 billion in creations.

Even with the boom in equity inflows, fixed income also has done well.

Bond funds pulled in $6.5 billion in November for a total this year of $120.2 billion.

"Fixed income funds continue to post inflows which, though nominally less than equities, have grown the segment's assets by nearly a third in 2017, twice the asset growth of equities in this period," Bartolini said.

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