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ETF Specialist

ETF Flows Set a Fresh Record in 2014

Both iShares and Vanguard have their strongest flows ever.

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The $241 billion of inflows into U.S. exchange-traded funds in 2014 were the strongest ever and topped the $190 billion inflow in 2012. Strong flows and market appreciation helped push assets to $2 trillion, and that milestone comes just four years after hitting $1 trillion.

Investors showed a strong preference for U.S. equity funds in 2014. The three ETFs with the largest inflows in 2014 were those tracking the S&P 500 Index.  SPDR S&P 500 ETF (SPY) is the largest of the three, and it brought in more flows than any other ETF. However, it continued to lose market share. The fund now holds 69% of the assets invested in S&P 500 Index ETFs, compared with 76% three years ago. Most of that lost market share has gone to  Vanguard S&P 500 ETF (VOO), which has done a better job matching the performance of the index and charges a lower expense ratio (0.05%) than SPY (0.09%).

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Michael Rawson does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.