U.S. investors plowed a record $183 billion into U.S.-listed exchange traded funds last year, surpassing the previous record of $178 billion set in 2008, according to State Street data.
"Last year's impressive overhaul amounts to yet another clear sign that ETFs are not only here to stay, but are increasingly chipping away at the dominance of mutual funds," said Olivier Ludwig, managing editor at IndexUniverse, which also tracks ETF assets.
Like mutual funds, ETFs, or exchange-traded-funds, offer exposure to a wide array of investments, from the broad stock and bond markets to individual sectors. But they're often cheaper and more tax friendly than traditional funds. ETFs can also be bought or sold at any time of day since they trade like stocks.
The world's largest ETF, the SPDR S&P 500 ETF (SPY), remained the most popular among investors, who poured nearly $16 billion into the fund in 2012.
And bond ETFs raked in $56 billion, or about 30% of all total assets, last year, with iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and the Pimco Total Return Fund ETF (BOND) among top 10.
In fact, Pimco's Total Return ETF, which debuted in March 2012 and is managed by Pimco founder and chief investment officer Bill Gross, ended the year with nearly $3.9 billion in assets, making it the second-most successful ETF launch in history after the 2004 entrance of the SPDR Gold ETF (GLD).
Overall, ETFs ended 2012 with more than $1.3 trillion in assets, nearly 30% higher from a year earlier.
Investors have been pulling money of the U.S. stocks for months, but the pace of outflows has picked up during the past couple of weeks.
U.S. stock mutual funds lost more than $7.5 billion in the week ended Nov. 20, according to the Investment Company Institute, adding to the previous week's $6.6 billion withdrawal.
In total, investors have yanked more than $14 billion during the two weeks following President Obama's re-election, as MOREHibah Yousuf - Nov 30, 2012 11:29 AM ET
Investors continued to buy up bonds and unload stocks last week, as they reacted to President Obama's re-election and geared up for a heated debate over how to solve the fiscal cliff.
While bond funds raked in $7.5 billion, U.S. stock mutual funds lost another $2.1 billion during the week ended Nov. 7, according to the Investment Company Institute.
The total inflow into bonds this year is now more than $275 billion, while MOREHibah Yousuf - Nov 15, 2012 11:19 AM ET
With the two-day market shutdown due to Hurricane Sandy, investors didn't do much with their money last week.
Overall, they pulled $488 million from long-term mutual funds in the week ended Oct. 31, according to the Investment Company Institute.
But that's far less than normal.
During a typical week this year, investors have injected an average of $5 billion into mutual funds.
The limited activity was partly due to the closure of U.S. MOREHibah Yousuf - Nov 8, 2012 2:22 PM ET
Investors continued to pull out of U.S. stocks last week, as worries about slowing global growth and a lackluster start to the third-quarter earnings period dampened investors' spirits.
U.S. stock mutual funds lost $2.3 billion during the week ended Oct. 10, according to data from the Investment Company Institute. That was far less than the prior week, when investors yanked $10.6 billion. Nonetheless, it still marked the 12th straight week of outflows.
Pessimism toward MOREHibah Yousuf - Oct 18, 2012 10:43 AM ET
Investors have been bailing out of the stock market all year, but the exodus picked up considerable speed last week.
U.S. stock mutual funds bled nearly $10.6 billion during the week ended Oct. 3, the most since the week in August 2011 when Standard and Poor's downgraded the U.S. credit rating following the debt ceiling brawl in Washington, according to data from the Investment Company Institute.
That brings the total 2012 outflow from U.S. MOREHibah Yousuf - Oct 11, 2012 1:35 PM ET
The retreat from the U.S. stock market continued last week, as investors refrained from making any big bets amid the market's summer doldrums.
Another $2.7 billion was pulled from U.S. stock market mutual funds during the week ended Aug. 15, according to the Investment Company Institute, bringing the 2012 outflow total to more than $69 billion. By comparison, those funds lost in the neighborhood of $40 billion during the first seven months MOREHibah Yousuf - Aug 23, 2012 11:16 AM ET
Maybe it's the heat but investors have slowed their flight for the exits.
U.S. stock mutual funds lost only $1.47 billion during the week ended July 11, according to the Investment Company Institute. A week earlier, investors pulled out more than twice that much: $3.2 billion. Investors have now withdrawn money from the stock market for 20 of the past 21 weeks.
There is a lot to worry about. Europe is far MORECatherine Tymkiw - Jul 19, 2012 9:32 AM ET
Investors continued to exit the stock market last week, as worries about Europe's ongoing debt problems keep rattling investors.
U.S. stock mutual funds lost $1.5 billion during the week ended June 27, according to the Investment Company Institute. Investors have now withdrawn money from the stock market for 18 of the past 19 weeks.
The latest week's outflows were logged prior to the "breakthrough" deal struck by European leaders aimed at easing the recapitalization of banks. MOREHibah Yousuf - Jul 5, 2012 2:03 PM ET
Fear about Europe's raging debt crisis and a slowing global economy kept investors fleeing for the exits.
U.S. stock mutual funds lost $1.8 billion during the week ended June 13, according to the Investment Company Institute. (Last week, investors only pulled out $620 million.) Tallying it up, that means investors have withdrawn money from the stock market for 17 of the past 18 weeks.
For the month of May, investors yanked out MORECatherine Tymkiw - Jun 28, 2012 4:46 PM ET
|Robin Williams' son and San Quentin inmate teach finance behind bars|
|Canada is on the verge of a recession|
|Here's why women feel cold in the office|
|Why Apple stock has plunged 15% from its all-time high|
|12 things you didn't know you could do with Gmail|