The first quarter of 2012 marked the best ever start to a year for the Exchange Traded Products (ETP) industry, according to BlackRock’s latest ETP Landscape Report, as investors continued to return to the market and selected ETPs to invest in a range of asset classes.
The ETP industry gathered net new assets of USD67.3bn during Q1 2012, representing an increase of 50% on Q4 2011 when net new assets stood at USD44.8bn, and an increase of 57% on the USD42.8bn of inflows recorded in Q1 2011.
Investor interest in fixed income ETPs also hit new highs during the quarter. Fixed income products attracted inflows of USD19.5bn, eclipsing the previous quarterly record of USD14.7bn set in Q4 2011, and accounted for 29% of all inflows into ETPs globally. Within the asset class, investors showed a clear preference for investment grade and high yield corporate bonds, with these two categories accounting for 85%, or USD16.5bn of total fixed income inflows.
Jennifer Grancio, managing director at BlackRock, says: “The first quarter of 2012 was very strong for the global ETP industry and global financial markets. Better-than-expected economic figures enticed investors back into the market and encouraged them to consider risk assets, and the data demonstrates that those investors are increasingly choosing ETPs to access new opportunities and express their views. However, despite improvements in the global economic outlook, there is still a degree of volatility and uncertainty around issues such as the Eurozone and oil prices, which will continue to colour investor sentiment in the months to come.”
Looking at other asset classes, emerging markets equity products attracted net new assets of USD13.7bn for the quarter, but flows varied widely on a month by month basis. Emerging market ETPs lost momentum during March with outflows of USD1.0bn, in contrast to the significant inflows of USD14.6bn posted during January and February. The majority of outflows came from single country ETPs, such as those offering access to individual countries including Taiwan, China, Brazil, Mexico and South Korea. ETPs offering broad emerging markets equity exposure attracted modest inflows of USD1.3bn in March.