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SSgA issues mid-year ETF & Investment Outlook


State Street Global Advisors (SSgA) has released a new report titled, 2012 ETF & Investment Outlook: Sinking or Swimming?, which focuses on developments shaping market performance and the Exchange Traded Fund (ETF) industry during the first half of 2012 and provides an updated investment outlook for the remainder of the year.

Developed by the SPDR ETF Strategy & Consulting Group, the report reveals that US ETFs attracted more than USD60 billion of inflows over the first five months of 2012, as 100 new funds were launched by 17 different providers, including one new entrant to the market. Amid signs the low interest rate environment will continue for the foreseeable future, demand for dividend/fundamental ETFs — the most popular category in 2011 — remained on top, as investors added USD8.9 billion of inflows to these funds in the first five months of the year. Investors also increased their exposure to credit/corporate, government credit and high yield bond ETFs.

"With concerns over job growth in the US top of mind coupled with Europe’s debt problems, investors continue to put their savings to work in ETFs that provide alternative sources of yield," says Kevin Quigg, global head of ETF Strategy & Consulting at State Street Global Advisors. "If flows continue at this pace, 2012 will mark the sixth consecutive year that ETFs attract more than USD100 billion in positive cash flows, which is remarkable given the trajectory of the markets during this period of time."

In addition to providing an overview of the growth of active ETFs and updating the three potential market scenarios featured in the 2012 ETF & Investment Outlook published in January 2012, the report revisits the two core investment themes expected to prevail all year — generating income and growth –encouraging investors to avoid the pitfalls of chasing yield and be mindful of undervalued, overlooked segments of emerging markets.

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