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Despite disappointing returns for equity investors, ETFs attracted over $300 billion of inflows for the second consecutive year in 2018, according to the latest US ETF Flash Flows report from State Street Global Advisors.

Last year saw a grand total of $314 billion of ETF inflows, resulting in ETF assets falling by $26 billion since the end of 2017. With the market in risk-off mode, fixed income ETFs posted their second highest monthly flow total of all time ($16.2 billion) in December.

“ETFs second consecutive year with over $300 billion in flows was a first for the industry. Nonetheless, three out of the five major asset class focuses we track had a decrease in assets: Equities, Commodity and Specialty,” noted Matthew Bartolini, Head of SPDR Americas Research at State Street Global Advisors. “Considering that equity focused ETFs made up 80% of all ETF assets to start the year, if their assets decline, so do the industry’s.”

While fixed income ETFs broke their consecutive monthly inflow streak (38 in a row) during the year and didn’t surpass $100 billion in total flows, 2018 was still a good year. As a result of the risk-off market sentiment, bond ETFs amassed a staggering $16 billion in the month of December – the second highest monthly flow total of all time. With November registering the sixth highest flow total ever, bond ETFs closed out 2018 with the largest back-to-back month hauls ever. As investors continue turning to ETFs for asset allocation, Bartolini expects fixed income assets to continue this ascent, irrespective of market sentiment.

“Overall, stripping out market impact, the industry continued growing in 2018 and taking share from mutual funds that witnessed both negative market returns and outflows,” Bartolini said.

He also noted a few year-end trends worth noting. First, while fixed income ETFs snapped their 38-month streak of consecutive inflows in 2018, bond ETFs amassed an impressive $97 billion of inflows during the year, as investors seeking to mitigate equity drawdowns increased their Government and Aggregate bond exposures.  Notably, Government bond ETFs saw their asset base increase by 72% just from inflows in 2018.

Secondly, from a full year perspective, global funds witnessed the most growth with 2018 flows equating to over 20% of their start-of-year assets. This growth is likely a result of an increase in strategic asset allocation models using basic building blocks to construct customized solutions, Bartolini explained.

Single country funds had the third highest growth rate for 2018, driven by China focused funds which accounted for 64% of all single country flows in 2018. However, their influence has waned; of the $1.3 billion deposited in December, China focused funds accounted for only $139 million. Brazilian focused funds drove flows in December, as investors positioned for populist driven fiscal stimulus.

Regional funds saw a 10% reduction in assets from flows in 2018, predominantly led by European regional funds ($9 billion of outflows in 2018) that have had nine consecutive months of outflows – two months shy of the record (11 months). Given the uncertainty of Brexit negotiations, a new record may be set in 2019.

Lastly, SSGA saw a rotation into value funds. Value ETFs attracted $7 billion of inflows in December, raising their 2018 total to $27 billion—nearly $10 billion more than growth ETFs attracted during the year.

Conversely, currency hedged ETFs continue bleeding assets, a sign investors are no longer considering the impact currencies can have on returns. $14 billion left even as hedged international exposures outperformed unhedged in 2018.