in October over the likely outcome of the US presidential election, the impact of the fiscal cliff in the US, the likely impact of superstorm Sandy and the on-going debt concerns in the Eurozone.
US listed ETFs and ETPs which traditionally account for the majority of NNA saw these uncertainties dampen the inflows into ETFs and ETPs listed in the US to just US$2.7 billion or 20% of NNA in October. Globally, ETFs and ETPs providing exposure to North America equities also suffered from these concerns as investors withdrew net outflows of US$10.1 billion.
As the majority of concerns and uncertainties focused on the US, and investments in the US, it did not negatively impact NNA flows in all regions around the world. We saw robust flows into ETFs and ETPs listed in both Europe, which accounted for US$4.6 billion or 34% of total NNA, and in Asia Pacific (ex Japan) which amassed US$4.5 billion or 33.7% of the total. Products listed in Japan, Canada, Middle East and Africa and Latin America accounting for US$1.7 billion.
“The source and composition of the fund flows in October shows that ETFs and ETPs are a product set that are increasingly being embraced by investors around the world and are a very good indicator of how investors are tactically and strategically adjusting their allocations to political, economic and other uncertainties that are impacting the markets” according to Deborah Fuhr, Managing Partner at ETFGI.
At the end of October 2012, the global ETF and ETP industry had 4,694 ETFs and ETPs, with 9,646 listings, assets of US$1.85 trillion, from 203 providers on 56 exchanges. Year-to-date global ETFs and ETPs have gathered US$201.7 billion of net new assets.
Year-to-date through the end of October, equity ETFs and ETPs have gathered the largest net inflows accounting for US$114 billion, followed by fixed income ETFs and ETPs with US$57 billion and commodity ETFs and ETPs capturing US$20 billion.
Equity focused ETFs and ETPs have gathered US$3.2 billion in October and US$114 billion YTD, which is US$23 billion more than the NNA flows they received in all of 2011. In October investors withdrew US$10.1 billion from ETFs and ETPs providing exposure to North American equity indices and invested US$8.8 billion into ETFs and ETPs providing exposure to emerging market equity indices.
Fixed Income ETFs and ETPs received net inflows of US$6.1 billion in October and US$57 billion year to date, which is US$21 billion more than the total net new assets they received in the same period last year. Within fixed income, corporate bond products have gathered the largest net inflows in October with US$3.4 billion, followed by emerging market products with US$1.9 billion.
Commodity products received NNA inflows of US$3.3 billion in October and US$20 billion year to date which is US$5 billion more than full year 2011 NNAs. Precious metals gathered US$2.4 billion in October and US$17.6 billion year to date, followed by broad commodity exposure with US$2.5 billion and US$1.1 billion in energy exposure.
Reviewing the NNA flows for the top 3 ETF and ETP providers globally in October, iShares accumulated US$10.9 billion in NNA and US$61.2 billion year to date which is in excess of their 2011 total of US$53.7 billion. Vanguard was second in the NNA race in October and year to date winning US$3.4 billion and US$46.3 billion respectively. Vanguard’s YTD NNA total of US$46.3 billion is US$10 billion above their full year 2011 NNA total of US$36 billion. SPDR ETFs suffered US$8.4 billion in NNA outflows in October but is still doing well on a year to date basis where they have taken in US$20.8 billion which is nearly the same amount they took in during all of 2011.
Note to editors
The challenging market conditions currently and over the past few years, combined with the difficulty in finding active managers that consistently deliver alpha, have caused investors to embrace the use of ETFs and ETPs. ETFs provide greater transparency in relation to costs, portfolio holdings, price, liquidity, product structure, risk and return compared to many other investment products and mutual funds.
ETFs are typically open-ended, index-based funds, with active ETFs accounting for less than 1% market share. They can be bought and sold like ordinary shares on a stock exchange and offer a broad exposure across developed, emerging and frontier markets, equities, fixed income and commodities. ETFs are used widely by institutional and increasingly by financial advisors and retail investors to:
- equitize cash
- implement diversified exposure to a market
- comprise a core or satellite investment
- be a long term strategic investment
- implement tactical adjustments to portfolios
- use as building blocks to create entire portfolios
- allow investors to hedge the market
- use as an alternative to futures and other derivative products
Exchange Traded Products (ETPs) are products that have similarities to ETFs in the way they trade and settle but they do not use an open-end fund structure. The use of other structures including unsecured debt, grantor trusts, partnerships, and commodity pools by ETPs can, in addition to a significantly different risk profile, create different tax and regulatory implications for investors when compared to ETFs which are funds.
Established by industry expert Deborah Fuhr and partners, ETFGI is a wholly independent research and consultancy firm providing services to leading global institutional and professional investors, the global exchange traded fund and exchange traded product industry, its Regulators, its advisers and its investors.
ETFGI produces extensive ETF-specific analysis covering over 4,700 ETFs and ETPs, across 9,500 exchange listings from over 200 providers on 50 stock exchanges.
ETFGI leverages extensive industry experience, unparalleled industry contacts and rigorous analysis to deliver proprietary research on the global ETF and ETP industry.
ETFGI offer a full range of consulting services covering the spectrum of the exchange traded exposure universe from data and analytics to assistance in understanding product structures, due diligence on products and service providers, from distribution and capital market challenges to governance and the regulatory environment. ETFGI provide services to both new and experienced institutional and professional investors interested in using and comparing ETFs and ETPs and better understanding the industry, product, regulatory and company specific data points.
ETFGI will soon be offering an annual paid subscription service which will provide: 1) the monthly ETFGI Global ETF and ETP Industry Insight report, which will provide a detailed analysis of the Global ETF and ETP industry, analysing net new asset flows into asset classes, products and managers, index provider rankings, broker rankings and new product launches, as well as numerous other metrics; 2) a directory of ETFs and ETPs; and 3) access to tools via the soon-to-be launched website www.etfgi.com that will allow investors to search for and compare the nearly 5,000 ETFs and ETPs which have almost 10,000 listings from over 200 providers on 54 exchanges. Investors can subscribe for a country or regional view of the ETF and ETP database if that better suits their investment or research requirements.
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