1) Retirement Assets Total $34.9 Trillion in Fourth Quarter 2020
ICI | 3/18/2021
Because… U.S. retirement assets dropped from $31.9 trillion at the end of 2019 to $28.3 trillion as of 1Q20, but they rebounded to $34.9 trillion at the end of last year. However, we believe the 12-month increase of 9.3% is attributed to market appreciation of underlying investments, rather than plan participant contributions. The ICI estimated that mutual funds from retirement accounts experienced net outflows of $262 billion. Excluding flows of $112 billion into money market funds puts sales of long-term funds in negative territory with $374 billion, the largest outflows over the past 30 years. Equity funds were hit the hardest with investors pulling out $363 billion. Hybrid funds, which include balanced funds, lifecycle funds, and lifestyle funds, experienced redemptions of $91 billion, whereas bond funds captured $80 billion. If we narrowed down to DC plans only, investors yanked $267 billion from long-term funds, including redemptions of $247 billion from equity funds and $49 billion from hybrid funds and flows of $28 billion into bond funds.
2) Tenth Edition of Schwab’s ETF Investor Study Shows Strong and Growing Appetite for ETFs
Schwab | 3/18/2021
Because… The Schwab study shows 94% of ETF investors and 45% of non-ETF investors surveyed are likely to purchase ETFs in the next two years. Earlier this month, BBH’s 8th annual global ETF investor survey found that ETF allocations continue to rise across the world, with 72% of global ETF investors planning to increase their ETF allocation in the next year. Investors’ strong appetite can also be witnessed by ETFs’ record sales. ETF.com reported that ETFs saw record-weekly sales of $71 billion last week, which brought YTD sales to an astonishing $252.5 billion. ETFs raked in a record $507 billion in 2020. At the current pace, the industry will certainly set a new sales record this year. At the end of 2020, 174 fund firms offered ETFs, compared with 688 mutual fund providers. The increased market demand and investors’ greater comfort level will inevitably propel the ETF industry to grow faster. We expect more asset managers to join the ETF wave as they cannot afford to miss the boat.
3) BNY Mellon to Launch Three Sustainable Equity ETFs
SEC Filings | 3/22/2021
Because… These three funds will not only be BNY Mellon’s first active ETFs, but also incorporate impact investing into the funds’ strategies. American Century also offers an ESG-focused actively managed ETF, American Century Sustainable Equity ETF (ESGA). It had $132.6 million in assets as of March 22, 2021 since its inception in July 2020. BNY Mellon is a latecomer to the ETF scene. It did not introduce its first ETFs until April 2020. After rolling out three broad market-based U.S. Equity ETFs on April 7, it expanded to fixed income and international equity markets with five more ETFs on April 22. Despite its late entry into the field, BNY Mellon made a splash when it charged no fees for two of its ETFs. U.S. Large Cap Core Equity ETF (BKLC) and Core Bond ETF (BKAG) are the industry’s first true zero-fee ETFs with the Core Bond ETF being the first bond fund ever with no fees. BKLC and BKAG now have assets of $233.1 million and $53.7 million, respectively. It will be interesting to see whether the firm’s new active ETFs will have a faster start.