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Tuesday, December 06, 2016

The Most Concentrated Asset Allocation Shift in History

News summary by MFWire's editors

After Donald Trump won the U.S. presidential election last month, investors bet big on stocks and punished bonds. And much of that shift was in ETF flows.

Mark Lapolla
Sixth Man Research
That ETF shift alone, Sixth Man Research's Mark Lapolla tells the Financial Times, was "the most concentrated asset allocation shift history," with about $50 billion flowing out of fixed income ETFs and into equity ones in just two weeks. And it underlines a much broader trend; though traditional open-end mutual funds still have most of the AUM, ETFs have been dominating net flows, and now ETFs are dominating trading, too.

"ETFs now account for nearly one-half of all trading in US stocks," Vanguard founder Jack Bogle tells the FT.

Indeed, the paper notes, "five of the world's seven most heavily traded equity securities are ETFs." The biggest ETF, SSgA's SPY, trades more than $14 billion each day, and the biggest gold ETF trades $27 billion each day; shares in Apple, the largest publicly-traded company, only trade $3 billion per day.

The FT wonders about the potential perils of ETFs' rapid rise and includes comments from: Laszlo Birinyi of Birinyi Associates; Mike Clements, head of European equities for SYZ Asset Management; Mark Dampier of Hargreaves Lansdown; Matt Hougan, head of Informa's Inside ETFs; Amin Rajan, head of Create Research; and Peter Sleep, senior PM at 7IM

Edited by: Neil Anderson, Managing Editor

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