While the shift of flows between ETF and Mutual funds have started to tilt in favor of ETFs, it’s still the early innings: A detailed examination of flows to US equity products

There are $17.3 Trillion dollars invested in ETFs & Mutual Funds in US-domiciled products. Only $3.1 trillion of that is in ETFs (18%). While flows have started to favor ETFs over Mutual Funds, decisions between the two products often differ by asset class. Of the $17 trillion in assets, $11.4 trillion is in equities, and of that, $8.3 trillion in what Morningstar classifies as either US or Sector equity. This is the asset class that seems to be feeling the largest reversal of preference by asset allocators. Within that $8.3 trillion, ETFs make up $1.8 trillion (or 22%). Much of that remaining $6.5 trillion in mutual funds was not achieved through flows but through capital appreciation.

While flows towards ETFs overall have just recently surpassed Mutual funds, it’s interesting to see here that ETFs have been the vehicle of choice when allocating towards US equities basically all the way back to 2007. The vast difference in AUM is again caused by a strong rising market. With all that, ETFs are still just 22% of this investment universe. A pullback in equities, diminishing tax liabilities of investors using Mutual Funds to access this asset class will likely only tilt the balance further.

TETF INDEX Vs. LEADING FINANCIAL INDEXES 

INDEX PERFORMANCE DATA

ETFs VS MUTUAL FUNDS 

UNDERLYING TOP/BOTTOM 10 HOLDINGS PERFORMANCE 

ESTIMATED SALES GROWTH BY SECTOR

ESTIMATED EPS GROWTH BY SECTOR

US ETFs FLOWS
Domestic Vs International Equity Flows [Quarterly in Billions]

US ETFs FLOWS
Flows by Asset Class [Quarterly in Billions]