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Review of First Half 2022: Growth Despite Headwinds


Published
July 14, 2022

At the beginning of this year, the New York Stock Exchange made five bold predictions for the active ETF market in 2022:

  1. Assets under management (AUM): Grow from $293.1 billion at the start of the year to exceed $425 billion by year end 2022
  2. Full year cash flow: Another new record with over $80 billion
  3. Mutual fund to ETF conversions: 10+ issuers will complete Mutual Fund to ETF conversions totalling over $20 billion
  4. Active semi-transparent: 20+ ETFs will launch, and assets will exceed $10 billion
  5. Growth milestone: At least 1 issuer will eclipse $60 billon in AUM

So where are we at the halfway point of 2022?

  • Assets have grown to $302.0 billion. Can we get a second half market rally?
  • First half cash flow is behind 2021’s record pace, but if the second half of the year ends up matching the first half total of $41.9 billion, our prediction will come true.
  • The industry welcomed six active ETFs from three separate issuers via conversion from mutual funds with combined assets on conversion of $16.4 billion. A few additional issuers are public with conversion plans, but this prediction may need a nudge to come true.
  • 6 new active semi-transparent ETFs came to market in the first half and assets stand at $4.2 billion. The current investable asset class limitation to U.S. equity appears to be a real headwind.
  • Dimensional ended the first half with $53.5 billion in assets. If their flows match the first half ($9.1 billion), this prediction should come true.

Beyond our bold predictions, there are three additional stats from the first half that stood out to us:

  • Firms with postive cash flow: 135 firms, or roughly 75% of firms
  • ETFs with postive cash flow: 546 active ETFs, or nearly 65% of all products
  • ETFs launched: 110 active ETFs launched through Q2 compared to 127 ETFs for first half 2021

Quarterly Active ETF Cash Flows

Source: Factset as of 6/30/2022

Annual H1 Total Flows

Source: Factset as of 6/30/2022

The actively managed ETF industry again grew across all asset classes through the first half. Equity flows continued to be the story of the industry, leading the way with $30.7 billion. Investors favored domestic equity exposure to international and value to growth. Notably, ETFs focused on yield via a dividend tilt and/or an options overlay were leaders. Commodities, $5.6 billon, cooled in the second quarter after a record first quarter in 2022. Fixed income flows, $3.4 billion, fell to third in asset class flows, and experienced their slowest growing first half over the last decade. The flows that did come in favored ultra and short-term ETFs as well as senior loans. Alternatives, $1.5 billion, gained their largest first half cash flow on record. Investors poured more money into these ETFs in first half of the year, than in the prior three years combined. Flows favored a combination of managed futures and real return strategies that focus on minimizing the impact of rising rates and inflation.

Active ETF Fund Flows by Asset Class

Global EquityDomestic EquityDomestic Fixed IncomeGlobal Fixed IncomeCommoditiesAsset AllocationAlternativesCurrency

AUM Leader

ARKDimensionalJPMorganFirst TrustInvescoETCFirst TrustProShares

AUM Leader $B

$13.8$38.7$25.9$17.5$8.7$1.8$0.9$0.6

H1 CF Leader

DimensionalJPMorganJPMorganDimensionalInvescoCambriaState StreetProShares

H1 CF Leader $B

$3.6$5.9$1.3$1.0$3.0$0.2$0.3$0.1

Source: Factset as of 6/30/2022

At the issuer level, JPMorgan continued to pace the industry with $9.5 billion in new flows. They were led by the combination of strong flows into JEPI ($5.9 billion) and JPST ($1.3 billion). Right behind them sits Dimensional with $9.1 billion, led by their suite of Core ETFs. Rounding out the top five for the first half of the year were First Trust ($5.0 billion), American Century ($4.3 billion) and Invesco ($2.5 billion). Collectively, the top five issuers by assets accounted for 50% of cash flow -- a continuation of the downward trend we previously discussed and a new low watermark for the last five years.

H1 2022 Cash Flow Leaders by Asset Class

H1 2022 Cash Flow Leaders by Asset Class

% Flows Going to Top 5 Issuers

Source: Factset as of 6/30/2022

Across the industry, nearly 75% of issuers experienced positive cash flow during the first half and nearly 30% saw inflows exceeding $50 million. Just outside of the top five, Innovator ($2.3 billion), Capital Group ($2.2 billion- 2022 market entrant) and Janus Henderson ($1.2 billion) all surpassed the $1 billion cash flow mark. Other notables included PGIM ($0.84 billion, 1x 2021 full year flows), abrdn ($0.61 billion, 1.25x 2021 full year flows), Horizon Kinetics ($0.60 billion, 2021 entrant), Goldman Sachs ($0.49 billion, 2.2x 2021 full year flows) and iM Global Partners ($0.25 billion, 5x 2021 full year flows). All told, roughly 50% of issuers experienced more cash flow in the first half than through all of 2021.

Top 5 Issuers by Cash Flow Annually (2017- H1 2022)

TickerTop 10 ETFs by Cash Flow ($B)H1 2022 ($M)

JEPI

JPMorgan Equity Premium Income ETF

$5,848

PDBC

Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF

$2,984

FTGC

First Trust Global Tactical Commodity Strategy Fund

$2,439

DFAC

Dimensional U.S. Core Equity 2 ETF

$1,641

AVUV

Avantis U.S. Small Cap Value ETF

$1,362

ARKK

ARK Innovation ETF

$1,347

JPST

JPMorgan Ultra-Short Income ETF

$1,285

JEMA

JPMorgan ActiveBuilders Emerging Markets Equity ETF

$1,223

FTSM

First Trust Enhanced Short Maturity ETF

$1,126

JAAA

Janus Detroit Street Trust Janus Henderson AAA CLO ETF

$1,100
TickerBottom 10 ETFs by Cash Flow ($B)H1 2022 ($M)

MINT

PIMCO Enhanced Short Maturity Active ETF

$(1,759)

JPHY

JPMORGAN HIGH YIELD RESEARCH ENHANCED ETF

$(1,528)

FIXD

First Trust TCW Opportunistic Fixed Income ETF

$(1,050)

LMBS

First Trust Low Duration Opportunities ETF

$(826)

IVOL

Quadratic Interest Rate Volatility & Inflation Hedge ETF

$(746)

COMT

iShares U.S. ETF Trust iShares GSCI Commodity Dynamic Roll Strategy ETF

$(746)

IGBH

iShares Interest Rate Hedged Long-Term Corporate Bond ETF

$(688)

BOND

PIMCO Active Bond ETF

$(614)

GSY

Invesco Ultra Short Duration ETF

$(554)

ARKW

ARK Next Generation Internet ETF

$(446)

Source: Factset as of 6/30/2022

At the product level, nearly 65% of active ETFs saw positive flows in the first half and 150 experienced flows over $50 million (often viewed as a break-even measure for an ETF). Notably, over the last year we observed the industry’s asset weighted expense ratio tick down from 0.52% to 0.42%. A deeper dive reveals an interesting market reversal as ETFs priced at or below 0.46% secured 65% of the flows through the first half. When we completed a similar analysis in 2021 (shown below), the opposite held true with nearly an identical percentage of flows going to ETFs over the market average expense ratio. Despite this reversal, new active ETF pricing continues to favor prices north of 0.50%, as evidenced by nearly 70% of ETFs launched over the last year falling into this bucket. This is a trend to watch!

Source: Factset as of 6/30/2022

As the industry enters the second half of the year, we will be keeping a watchful eye on the evolving active ETF market and how our five bold predictions for 2022 play out.

First Half Launch Montior

Domestic Equity

36 ETFs Launched

$9.3 B Assets Raised

Domestic Fixed Income

13 ETFs Launched

$$1.5 B Assets Raised

Alternatives

4 ETFs Launched

$202 B Assets Raised

Int'l/Global Equity

36 ETFs Launched

$9.605 B Assets Raised

Asset Allocation

9 ETFs Launched

$195 M Assets Raised

Int'l Global Fixed Income

5 ETFs Launched

$420 M Assets Raised

Source: FactSet as of 06/30/2022, figures include MF-ETF conversions

Active ETF Stat Pack

Firms
# of Issuers179
# of New Issuers 202227
ProductsAssets
# of ETFs848AUM ($B)$302.69
# of New Launches 20221103 Yr AUM CAGR156%
Avg. ER0.46%5 Yr AUM CAGR54%
Cash FlowTrading
YTD Cash Flow ($B)$41.30YTD ADV (Shares)127,607,543
3 Yr Cash Flow$207.30YTD ADV ($)$5.23 B
5 Yr Cash Flow$255.80YTD Avg. Spread (bps)*32.70

Source: Factset & NYSE Internal Database and Consolidated Tape Statistics as of 2/14/2022

*Simple average

Active, Semi-Transparent ETFs

TickerInceptionNameAUMYTD Cash Flow30-Day Med. Spread (bps)ADV (shares)StructureLMMExpense Ratio
EQOP09/17/2020Natixis U.S. Equity Opportunities ETF$8,120,271$623,98714.211,039NYSE AMSCitadel0.90%
VNSE09/17/2020Natixis Vaughan Nelson Select ETF$7,520,814$3,983,73310.8951,709NYSE AMSCitadel0.80%
VNMC09/17/2020Natixis Vaughan Nelson Mid Cap ETF$7,150,402$(288,632)14.58539NYSE AMSCitadel0.85%
ESGA07/15/2020American Century Sustainable Equity ETF$120,991,680$(9,222,718)11.93513,933NYSE AMSCitadel0.39%
MID07/15/2020American Century Mid Cap Growth Impact ETF$21,763,940$4,540,40010.2454,608NYSE AMSCitadel0.45%
ESGY07/01/2021American Century Sustainable Growth ETF$5,946,930$803,5276.085500NYSE AMSCitadel0.39%
NDVG08/05/2021Nuveen Dividend Growth ETF$6,081,712$521,0677.613,557NYSE AMSCitadel0.64%
NSCS08/05/2021Nuveen Small Cap Select ETF$5,194,358$6,08410.9422NYSE AMSCitadel0.85%
NWLG08/05/2021Nuveen Winslow Large-Cap Growth ESG ETF$4,558,875$220,9548.085,164NYSE AMSCitadel0.64%
NUGO09/28/2021Nuveen Growth Opportunities ETF$2,357,015,415$30,826,1676.85172,091NYSE AMSCitadel0.55%
SAEF11/16/2021Schwab Ariel ESG ETF$10,056,800$4,656,85025.7454,012NYSE AMSFlow Traders0.59%
IWLG06/23/2022IQ Winslow Large Cap Growth ETF$7,523,250$-18.22549,668NYSE AMSCitadel0.60%
IWFG06/23/2022IQ Winslow Focused Large Cap Growth ETF$5,067,000$508,15017.7244,901NYSE AMSCitadel0.65%
FDG04/02/2020American Century Focused Dynamic Growth ETF$122,455,918$(17,859,205)11.01525,777ActiveSharesCitadel0.45%
FLV04/02/2020American Century Focused Large Cap Value ETF$213,151,918$(8,099,752)10.4259,670ActiveSharesCitadel0.42%
CFCV05/28/2020ClearBridge Focus Value ETF$3,321,321$339,81834.07263ActiveSharesGTS0.50%
FBCG06/04/2020Fidelity Blue Chip Growth ETF$313,193,625$(17,336,340)24.23144,038Fidelity ProxyGTS0.59%
FBCV06/04/2020Fidelity Blue Chip Value ETF$108,596,110$14,430,25832.32528,933Fidelity ProxyGTS0.59%
FMIL06/04/2020Fidelity New Millennium ETF$53,086,215$(4,169,738)31.72511,468Fidelity ProxyGTS0.59%
FGRO02/04/2021Fidelity Growth Opportunities ETF$54,880,238$20,285,48013.82179,911Fidelity ProxyCitadel0.59%
FMAG02/04/2021Fidelity Magellan ETF$41,282,780$(286,875)1518,728Fidelity ProxyRBC0.59%
FPRO02/04/2021Fidelity Real Estate Investment ETF$19,310,550$784,3739.177,321Fidelity ProxyCitadel0.59%
FSMO02/04/2021Fidelity Small/Mid-Cap Opportunities ETF$25,270,135$(113,630)14.938,102Fidelity ProxyRBC0.59%
FSST06/17/2021Fidelity Sustainability U.S. Equity ETF$5,304,810$482,08513.991,201Fidelity ProxyRBC0.59%
FDWM06/17/2021Fidelity Women's Leadership ETF$2,419,485$23514.95746Fidelity ProxyRBC0.59%
TCHP08/05/2020T. Rowe Price Blue Chip Growth ETF$224,912,426$55,833,53612.09147,768T Rowe ProxyVirtu0.57%
TDVG08/05/2020T. Rowe Price Dividend Growth ETF$141,676,732$38,402,08310.96528,772T Rowe ProxyRBC0.50%
TEQI08/05/2020T. Rowe Price Equity Income ETF$86,189,772$37,593,1268.5519,810T Rowe ProxyVirtu0.54%
TGRW08/05/2020T. Rowe Price Growth Stock ETF$37,618,685$6,280,35812.7216,147T Rowe ProxyRBC0.52%
TSPA06/08/2021T. Rowe Price U.S. Equity Research ETF$20,126,237$1,394,36111.472,047T Rowe ProxyRBC0.52%
IVDG12/22/2020Invesco Focused Discovery Growth ETF$662,909$(214,240)10.59393Invesco ModelCitadel0.59%
IVSG12/22/2020Invesco Select Growth ETF$1,007,410$(1,820)10.075430Invesco ModelCitadel0.48%
IVLC12/22/2020Invesco US Large Cap Core ESG ETF$5,709,132$99,95016.622,378Fidelity ProxyCitadel0.48%
IVRA12/22/2020Invesco Real Assets ESG ETF$3,132,614$1,085,24029.6751,952Fidelity ProxyCitadel0.59%
LOPP02/01/2021
Gabelli Love Our Planet & People ETF
$11,810,580$3,319,19041.941,120ActiveSharesGTS0.90%
GGRW02/16/2021Gabelli Growth Innovators ETF$2,486,200$-52.15687ActiveSharesGTS0.90%
GAST01/05/2022Gabelli Asset ETF$4,116,210$244,38052.4135ActiveSharesGTS0.90%
FRTY03/01/2021Alger Mid Cap 40 ETF$26,264,250$1,931,37541.1124,315ActiveSharesVirtu0.60%
ATFV05/04/2021Alger 35 ETF$9,440,625$(100,250)37.842,516ActiveSharesVirtu0.55%
REIT02/26/2021ALPS Active REIT ETF$17,785,101$(5,027,450)34.266,923Blue TractorGTS0.68%
STNC03/16/2021Stance Equity ESG Large Cap Core ETF$36,715,869$4,518,49129.2252,132Blue TractorGTS0.85%
PFUT05/26/2021Putnam Sustainable Future ETF$6,380,666$545,43633.4551,946Fidelity ProxyVirtu0.64%
PLDR05/26/2021Putnam Sustainable Leaders ETF$5,724,496$6,66314.715220Fidelity ProxyRBC0.59%
PGRO05/26/2021Putnam Focused Large Cap Growth ETF$9,371,376$2,249,22214.7252,355Fidelity ProxyRBC0.55%
PVAL05/26/2021Putnam Focused Large Cap Value ETF$33,471,278$18,065,82630.84510,221Fidelity ProxyVirtu0.55%
HFGO11/09/2021Hartford Large Cap Growth ETF$68,563,755$76,032,52130.715196,018Fidelity ProxyCitadel0.59%
SEMI03/30/2022Columbia Seligman Semiconductor and Technology ETF$11,970,647$8,569,05031.45517,589Fidelity ProxyVirtu0.75%
DCPE04/05/2022DoubleLine Shiller CAPE U.S. Equities ETF$51,330,840$59,013,60029.59119,080ActiveSharesCitadel0.65%
GABF05/11/2022Gabelli Financial Services Opportunities ETF$4,910,570$135,10530.92342ActiveSharesGTS0.00%
 
Total/Average$4,213,867,120$191,861,75519.871,010,568
 
0.61%

Source: FactSet & NYSE Internal Database and Consolidated Tape Statistics as of 5/13/2022

*Simple average

June Active ETF Launches

TickerNameIssuerAsset ClassAUM
AHOYNewday Ocean Health ETFNewday06/07/2022Equity$944,465
UDIUSCF Dividend Income FundUSCF06/08/2022Equity$5,267,070
GVLUGotham 1000 Value ETFGotham Asset Management Holdings06/08/2022Equity$11,426,415
LONZPIMCO Senior Loan Active Exchange-Traded FundAllianz06/09/2022Fixed Income$64,728,700
JIREJPMorgan International Research Enhanced Equity ETFJPMorgan Chase06/13/2022Equity$5,195,431,166
SYIISyntax Stratified Total Market II ETFSyntax Advisors06/16/2022Equity$13,616,120
OAIEOptimize AI Smart Sentiment Event-Driven ETFOptimize06/16/2022Alternatives$488,292
BUFQFT Cboe Vest Fund of Nasdaq-100 Buffer ETFsFirst Trust06/16/2022Equity$2,029,891
IWLGIQ Winslow Large Cap Growth ETFNew York Life06/23/2022Equity$7,523,250
IWFGIQ Winslow Focused Large Cap Growth ETFNew York Life06/23/2022Equity$5,003,620
CLOIVanEck CLO ETFVanEck06/23/2022Fixed Income$25,110,000
NSPYNightShares 500 ETFAlphatrai Funds, Inc.06/28/2022Asset Allocation$3,911,250
NIWMNightShares 2000 ETFAlphatrai Funds, Inc.06/28/2022Asset Allocation$3,000,900
 
Total - 13 New ETFs
 
 
$5,338,481,139

Source: Factset as of 6/30/2022

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