The global exchange-traded product industry attracted nearly USD200bn of positive flows during the first 11 months of 2012, propelling global ETP assets under management to USD1.8trn, according to a report by State Street Global Advisors (SSgA).
2013 ETF & Investment Outlook: Finding Opportunities in an Age of Uncertainty, by the SPDR ETF strategy and consulting group, says that the asset classes favoured by ETF investors during this period of time include US fixed income (USD32.2bn in ETF inflows), emerging markets equity (USD20.2bn), and US equity large cap blend (USD16.6bn).
Investors also significantly increased their exposure to commodities/precious metals ETPs (USD13.8bn of inflows) and high yield fixed income ETFs (USD12.6bn).
“ETF industry assets and net new flows increased at a robust pace in 2012, as a growing universe of investors embraced their transparency, precision, and ease-of-use,” says Kevin Quigg, global head of ETF strategy and consulting at State Street Global Advisors. “Despite lingering economic uncertainty, ETF asset flows should continue to increase in 2013, due to better ETF education and awareness and a growing willingness among investors to embrace new asset classes to generate income and growth in their portfolios.”
In addition to providing a 2013 investment outlook that features base, bull, and bear case scenarios, the 2013 ETF & Investment Outlook report identifies the following two investment themes that are expected to drive ETF asset flows and product development in the year ahead:
Going global for income and total return – As interest rates remain low and the search for yield evolves, investors will increasingly view the income allocation in their portfolio from a global and total return perspective to enhance returns and avoid the pitfalls of chasing yield.
The return of growth: reflating with equities and real assets – Having shunned equities for the perceived safety of fixed income in recent years, investors with long-term horizons will revisit the role of equities and other assets that offer the best ability to provide positive real returns during the continued road to economic recovery.
“On the eve of the ETF industry’s 20th anniversary, product development is poised to shift toward solutions oriented funds,” says David Mazza, head of ETF investment strategy at State Street Global Advisors. “Fuelled in part by prevailing economic uncertainty and increasing competition across the global ETF landscape, investors can expect to see more unique fixed income and active ETFs come to market during this new chapter in product development.”
The etfexpress Awards 2013 for the top ETF product and service providers will be held in London towards the end of Q1 2013. Please click here to nominate your product/firm.