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US ETPs AUM reaches all time high of USD986bn

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Assets under management of US exchange-traded products reached an all time high of USD968bn for a total 23.9 per cent increase year-to-date, according to a report by Deutsche Bank.



This was amidst a week where the market resumed its rally on the ground that the outcome from US elections, QE2 and the new jobs data will be positive and lead towards the expected financial recovery of the US.

ETP flows figures suggest that emerging market equity markets continue to be appealing to investors as money continues to pour in steadily beyond Q3 into Q4. Emerging market products have received USD 8.8bn so far into Q4.

On the other hand, the latest economic developments in the developed markets markets, particularly in the US, have given a boost to the equity markets rally which began in the beginning of September, while at the same time attracting significant inflows. Developed markets ETPs have gathered USD7.8bn of fresh money quarter to date.

The price of gold has climbed 6.52 per cent since the end of Q3 and stands today at all-time record highs. However, the report says gold ETPs flows suggest that there is something wrong with this picture. Unlike the Q2 gold price rally we experienced earlier this year in which the golden metal rose 11.59 per cent and accumulated massive flows of over USD8bn, this time the metal rally has been flow-less. In addition, an environment of lower volatility and rising equity market, as the current one, shifts the views of investors back to equities away from safe havens, which is completely opposite to what we experienced during Q2.

Although some analyst’s fundamental views on the metal support a further increase in the price of gold, the ETP flows pattern suggests that gold may be running out of steam on its ride towards higher levels. On the other hand, other precious metals, such as silver, are performing an attempt to take on the leading role within the precious metals space. Silver price has surged 22.9 per cent since the end of Q3 and the metal has accumulated over USD1 billion of steady inflows so far.

Total ETP inflows in the US added up to USD7.8bn during the week ending 5 November versus USD1.9bn on the previous week, more than three times this year’s average weekly flow of USD2.2bn. Equity, fixed income and commodity ETPs had inflows of USD7.0bn, USD546m and USD314m, respectively. Currency ETPs recorded USD72m of outflows.

Within equity ETPs, products focused on the US received the largest inflows (USD5.6bn), followed by emerging markets focused ETPs (USD1.3bn). Long leveraged ETPs experienced the largest outflows (USD200m).

The fixed income ETPs inflows were led by corporates ETPs (USD319m), followed by sub-sovereign ETPs (USD176m). Within corporate ETPs there was increased activity in the high yield sector, while emerging markets debt ETPs were the most active on the sub-sovereign side. On the outflows side, sovereign ETPs recorded the only negative flows figures for the category.

There were four new products added to the ETP lineup over the week.

Global X Funds launched two ETFs offering access to new niche investment segments. GLDX will attempt to offer exposure to gold miners focusing on the exploration phase. The other fund, URA, is an alternative-energy play and offers access to uranium related companies.

The other two funds were launched by Pimco and Vanguard and offer access to the US broad treasury and global ex-US Reit markets, respectively.

Average daily turnover remained flat and totalled USD63bn at the end of the week. Commodity ETPs turnover experienced the largest increase (USD227m or 6.3 per cent).

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