Global ETF and ETP assets hit new heights
Global ETF and ETP assets hit new heights
Independent research and consulting firm ETFGI has announced that global assets invested in exchange traded funds (ETFs) and exchange traded products (ETPs) hit an all-time high of over US$1.7 trillion (US$1,762 billion) at the end of August 2012. Year-to-date through end of August 2012 ETF and ETP assets have increased by 15.5% from US$1,526 billion to US$1,762 billion.
Over the past ten years the compounded annual growth rate (CAGR) of these products globally has been 26.5%. There are currently 4,713 ETFs and ETPs, with 9,620 listings, assets of US$1,762 billion, from 204 providers on 56 exchanges.
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.
Deborah Fuhr, managing partner at ETFGI, says: “In a world where investment products come and go in the blink of an eye, ETFs have proved that they are here to stay and might be considered one of the most innovative financial products in the last two decades. They are one of the few products that are offered on the same terms to both retail and institutional investors
“Market volatility may be making investors wary about the stock market, but they continue to find exchange-traded funds and other exchange traded products useful tools.”
Capital flows this year within ETFs also demonstrate how these products have become important indicators to gauge shifts in investor sentiment between and among asset classes. Year to date through end of August 2012, ETFs and ETPs saw net inflows of US$143 billion which is US$23 billion above the level of net new assets at this time last year. Equity ETFs and ETPs have gathered the largest net inflows accounting for US$76 billion, followed by fixed income ETFs and ETPs with US$47 billion and commodity ETFs and ETPs capturing US$10.5 billion.
Fixed Income ETFs and ETPs have also proven to be very popular this year with US$47 billion in net new assets, which is US$1 billion more than the total new assets they received last year. Within the fixed income universe corporate bond products have gathered the largest net inflows with US$18.5 billion, followed by high yield products with US$11 billion and broad/aggregate bond exposures with US$4.9 billion.
Equity focused ETFs and ETPs have gathered US$76 billion which is US$7 billion more than this time last year. Products providing exposure to the United States/North American equities have gathered US$39 billion, followed by emerging market equity with US$22 billion and Asia Pacific equity with US$7 billion.
Commodity flows at US$10.5 billion are slightly lower than this time last year. Precious metals have gathered the largest net inflows with US$9.5 billion, followed by broad commodity with US$1.3 billion and energy with US$901 million. Agriculture experienced the largest net outflows at US$1.2 billion.