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Global ETP asset flows surge in September

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Global asset flows for exchange traded products (ETPs) surged in September to their highest monthly level in nearly four years, according to the latest BlackRock (NYSE: BLK) ETP Landscape Report.

In September investors added USD43.3 billion to ETPs globally, as monthly flows hit a level not seen since December 2008, when the industry added USD51.3 billion in net assets. In  August, the net flows total was USD11.6 billion.

Globally, ETP assets reached a new high of USD1.85 trillion, compared with USD1.76 trillion the end of August.

For January through September this year, the ETP industry has attracted record-breaking net flows of USD182.6 billion, surpassing the previous high of USD164.8 billion for the January-September period set in 2008.  Year to date, global ETP flows have already surpassed 2011’s full year total of USD173.4 billion.

September’s flows were boosted by a “risk rally” in the wake of asset purchase announcements by the European Central Bank, the US Federal Reserve and the Bank of Japan, the report noted.

“September was an exceptionally strong month for the global ETP industry as additional monetary easing by major central banks served as a catalyst for investors to move into ETP risk assets across geographies and asset classes, with equity funds leading the way,” says Dodd Kittsley, Global Head of ETP Research at BlackRock.

Of the USD43.3 billion September net-flows total, equity funds attracted USD34.7 billion, with US equity funds alone taking USD23.4 billion.  By comparison, in August investors added just USD0.3bn in new assets to equity ETPs.

Europe was a significant contributor to the rally in flows in September, with Pan-European Equity ETPs adding USD3.1 billion, the highest monthly total for the category since October 2008.

Gold ETPs drew USD3.8 billion in September, building on strong August flows to reach a record high two-month total of USD7.4 billion.

Recent asset purchases by the Federal Reserve, which have been designed to provide stimulus by maintaining interest rates at low levels, could provide particular support for gold going forward, Kittsley said.

"Historically, the most significant driver of commodity returns has been the level of real-interest rates, with gold the biggest beneficiary of low real rates that reduce the opportunity cost of holding the metal," he says.

Over the year to date, fixed income has been a key growth driver, attracting 30% of all inflows with USD54.1 billion so far this year, compared with USD35.2 billion for the same period last year and USD49.9 billion for full year 2011.

Emerging markets equity also is strongly outpacing last year’s figures, with USD26.9 billion  year to date, compared with USD5.8 billion for January through September last year and USD9.7 billion for the full year 2011.

"The dominant trends in market flows globally continue to demonstrate that investors are deploying ETPs opportunistically to secure key asset exposures as well as adjust portfolios in response to emerging risks," Kittsley says. "Use of ETPs as highly efficient, tactical asset allocation tools remains one of the vehicle’s most evident investor benefits."

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