“Nicholas Colas at ConvergEx plays off of Mitt Romney’s current PR troubles to point out that fund flows into ETFs have hit $47 billion for the third quarter, and goes on to predict that “ETF assets will explode” in the fourth quarter.
The $47 billion to hit in the third quarter so far is an acceleration from the first half of the year, when ETFs took in an average of $37.5 billion a quarter. Seventy-five percent of the third quarter money has gone into equity ETFs, and nearly half of that, $22.9 billion, into U.S. equities, Colas notes.
That’s not enough to offset the $40.3 billion that’s flowed out of traditional mutual funds, he acknowledges.
The vast majority of ETF fund inflows went into so-called passive, or indexed, funds. Sector specific funds seeing the most inflows included financials, up $1.6 billion, and industrials, up $1.1 billion.
As for the fourth quarter:
“My most considered thought about Q4 2012 is that ETF assets will explode, posting further gains above and beyond even Q3’s accelerating AUM growth. The largest driver of this expansion will be investors who wish to lock in the tax treatment of capital gains according to 2012’s regulations, rather than roll the dice on what may come in 2013 and future years.”
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