By using ETFs to bottom-fish U.S. stocks and bonds, U.S. ETF inflows hit a record high, with VOO attracting $65 billion

Accompanied by market turbulence, American investors are rushing into ETFs.

Since the beginning of this year, the uncertain U.S. stock market has created a good opportunity for investors to buy the dip, while some funds have shifted from mutual funds to ETFs. U.S. ETFs have absorbed $437.9 billion in funds so far this year, and the inflow is expected to set a record for the second consecutive year.

In this year's ETF funding frenzy, the biggest beneficiary is Vanguard Group's S&P 500 ETF (ticker: VOO), which has seen an astonishing net inflow of $65 billion this year, making it the largest ETF by assets globally.

Last year, VOO set a record for annual ETF inflows at $116 billion, and it is expected to break this record again before October this year. Data shows that when the volatility of the U.S. stock market soared to a five-year high in April, the fund recorded its highest monthly inflow ever.

Greg Davis, President and Chief Investment Officer of Vanguard, stated:

“During the turmoil in early April, we saw a buy-sell ratio of 5 to 1. Investors are holding a lot of cash, and they know that when assets drop, it’s time to put money into the market.”

It is noteworthy that the long-term trend of shifting from mutual funds to ETFs may soon accelerate further.

Reports indicate that dozens of fund management companies have submitted applications to the U.S. Securities and Exchange Commission (SEC) to provide new ETF share classes for existing mutual funds, which will allow them to offer popular strategies under the ETF framework without starting from scratch.

SEC Commissioner Mark Uyeda stated earlier this year that he has requested the agency's staff to prioritize this issue, and industry insiders expect approval as early as this year.

"Cash is King" Mentality Solidifies, Short-Term U.S. Treasury ETFs Become Popular

Although stock ETFs dominate, investors' defensive mindset remains evident.

Data shows that the second most popular ETF this year is BlackRock's 0-3 Month Treasury Fund, which has seen inflows of nearly $17 billion, with a 12-month tracking yield of 4.7%. Similar products from State Street also made it into the top ten inflows.

Larry Fink, CEO of BlackRock, stated earlier this month:

“There is $11 trillion in cash sitting in money market funds in the U.S. When there is uncertainty, people hold more cash, which is what we have observed.”

Todd Rosenbluth, Head of Research at data provider VettaFi, also pointed out:

“We are seeing some defensive moves in fixed income assets. Several short-term Treasury products are among the top ten, indicating that investors are willing to wait.”

Actively Managed ETFs Surge, "Boomer Candy" in High Demand

It is noteworthy that actively managed ETFs are gaining an excess share of new assets.

According to Trackinsight data, although actively managed funds account for less than 10% of the total assets in the ETF industry, 30% of ETF fund inflows this year have gone into these products.

An actively managed equity fund from JP Morgan has also made it into the top ten, aiming to reduce volatility and generate above-average dividend income through options strategies. Analysts have humorously dubbed these products "boomer candy," as they are quite popular among retirees.

Greg Friedman, Head of ETF Management and Strategy at Fidelity, stated:

"Over the past 12 to 24 months, we have seen very good levels of fund inflows, most of which have come from actively managed products. This trend has remained stable even during periods of extreme volatility."