The combined assets of exchange-traded funds (ETFs) fell just shy of $160 billion in December, topping Novembers inflow of $132.7 billion and increasing nearly 50% on December 2002s inflow of $102.1 billion, according to the most recent data from the Investment Company Institute.
ETF shares issued exceeded those that were redeemed by $12.6 billion. ETFs are more tax efficient than most mutual funds, and feature low operating and transaction costs, with no sales loads or minimum investment requirements.
In a separate analysis, ICI found that mutual the combined assets of mutual funds grew by $178.9 billion, or 2.5%, over the same period, to $7.4 trillion. All in all for 2003, total mutual fund assets grew by $1 trillion.
Long-term stock, bond and hybrid funds saw a collective inflow of just under $15.6 billion in December, up from $15.3 billion in November. Year-on-year inflows to long-term funds reached $217.4 billion, up 79% from $121.2 billion in 2002.
Meanwhile, stock fund inflows declined slightly from $14.9 billion in November to $14.7 billion in December, but increased year-on-year to $152.8 billion from a net outflow of $27.8 billion in 2002.
Higher interest rates continued to take their toll on bond funds, accounting for the $2.9 billion outflow in December and a $2.7 billion outflow in November. Overall for 2003, bond funds saw an inflow of $31.8 billion, significantly lower than the $140.3 billion inflow in 2002.
Hybrid funds fared better, increasing to $3.7 billion in December from $3 billion in November, ending the year on an inflow of $33.2 billion, up from $8.6 billion in 2002.