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Source ranked first for net new assets in the European ETP market for first four months of 2012


Source was ranked No1 for net new assets in the European Exchange Traded Products (ETP) market for the first four months of 2012, according to Deutsche Bank Research.

While equity and commodity products continue to gather assets, investor interest in volatility and fixed income ETPs has grown considerably. Source has continued to cement its position in the European ETP industry, capturing net new assets of over USD1.46 billion this year (61% of total net new assets in the European ETP market) and launching innovative products in alternative, fixed income and commodity asset classes.
Volatile markets have constrained net flows into European ETFs and ETCs in the first four months of 2012. The overall European market recorded USD2.4 billion of net new assets for the year to date, despite outflows of USD5.3 billion over the month of April. Major inflows were seen in Fixed Income and Physical Gold products. The vast majority of outflows came from ETFs tracking one benchmark, namely the DAX, for which spring historically has been a very active period with a lot of the activity linked to the German dividend season. Other outflows occurred in money markets and emerging market equities.
Volatility is already one of this year’s key stories. A calmer period in global markets combined with rising equity prices produced a good entry point for volatility exposure particularly as a hedge for equity positions. Innovation in delivering volatility exposure offers investors more efficient medium term investment opportunities. Source has quickly become the market leader in volatility-linked ETFs, having launched three new products this year and gained assets of over USD880 million, giving Source a European market share of over 75% of volatility exchange traded funds.
European fixed income ETPs saw net inflows of over USD1.1 billion in the first four months of the year, compared to net outflows in the same period last year. Source has experienced strong demand for the new PIMCO Source Short-Term High Yield Corporate Bond ETF (STHY). This physically invested ETF is the first in Europe to provide access to the global short maturity high yield sector, an area which has historically provided a defensive alternative to equities while producing similar returns but with substantially reduced volatility.  Benefitting from PIMCO’s “smart passive” approach, the ETF addresses investor concerns regarding both high index tracking error and the narrow security coverage of many existing high yield alternatives. Since its launch on 19 March, the fund has already attracted USD100 million in assets.
2012 has been challenging for the performance of commodity assets, despite this, investors continued to increase their exposure to gold and broad commodity markets. The Source Physical Gold P-ETC has seen USD142 million of inflows and the LGIM Commodity Composite Source ETF, which was launched early January has managed to capture over USD89 million of new client money this year, with a strong April, seeing inflows of USD63.4 million making it the second fastest growing commodity ETP in Europe during April. Source ETCs are third in Europe by AUM, with over USD2.65 billion in assets. Source Physical Gold ETC ranked third on the London Stock Exchange by Commodity ETP turnover for the month of April.

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