September Inflows Boost ETF Market

October 01, 2012

Inflows into the global exchange-traded fund have boomed in September as investors return to equities.

Data from BlackRock show that net new global inflows into ETFs and exchange traded products reached US$43.3bn in September, the highest single month total since December 2008.

According to BlackRock, the surge was driven by announcements of new asset purchases from the European Central Bank, the US Federal Reserve and the Bank of Japan.

Notably, inflows were largely driven by investors returning to equities. Equity funds saw inflows of US$34.7bn, 80% of the monthly total, with US$23.4bn entering US equity funds.

Pan-European equity ETPs also recorded inflows of $3.1bn, the highest monthly flows for the category since October 2008. Similarly, Gold ETPs received $3.8bn in September, which when combined with August’s flows of $3.6bn is a two-month record.

According to BlackRock, “ETP flows continued at a record-breaking pace for the year, setting a new Jan-Sept high of US$182.6bn, which surpassed the previous record high of US$164.8bn, set in 2008. YTD Global ETP flows have already surpassed 2011’s full year total of US$173.4bn.”

The inflows are a boon for the global ETP market, which suffered from a noticeable slowdown in 2011.  Global ETP assets rose only 4% last year, much less than the 30% growth rate predicted by several providers at the beginning of the year.

Nizam Hamid, managing director and head of product development at European ETF provider, Lyxor, said: “ESMA’s proposals have put a lot of minds at rest going forward. There has been a wholesale change to the structure and risks associated with ETFs and investors are starting to feel more comfortable with them. This has prompted inflows to pick up, which is a good sign.”

However, he added that overall growth in the European market is still below half the predictions that were made at the beginning of the year.

He said: “Growth is still only at 5% in Europe, which is more than last year, but still well below the predictions of between 10-15% that were initially made.”


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