ETPs shrug off volatility with 24% growth

Fixed income was the fastest growing asset category in the exchange-traded products (ETP) marketplace last year, says the BlackRock Investment Institute in its year-end ETP Landscape report.

Compared to 2010, fixed income ETP assets grew 24.4%, or $50.6bn. Global fixed income ETP assets now total $258bn, highlighting “the popularity of this asset class in a tumultuous year for global markets,” BlackRock says.

Much of the growth was due the US economy and driven by US-listed products, while investors in European-listed products remained on the sidelines due to sovereign and bank debt concerns.

The global ETP industry ended the year with $1.525trn in AUM, up 2.9% from $1.482trn at year-end 2010. Net inflows totalled $151.9bn in 2011.

Developed market equity category grew by 3.3% in 2011, with healthy net inflows of $93bn offset by negative market return of -$65.5bn, for net growth of $27.7bn in AUM.

Despite the year’s serious macro-economic challenges, ETPs offering equity exposure to the US and Europe captured more new money in 2011 ($48.8bn and $15.0bn, respectively) than in 2010 ($40.1bn and $8.7bn).

Emerging market equity category contracted by 18.7%, due to negative market return of -$43bn and net redemptions of $1.8bn for the year. By comparison, the category attracted $40.5bn in net inflows in 2010.

The U.S. remains the largest and most mature market in the ETP industry, with asset growth of 5% in 2011. US ETP assets now total $1.1trn, representing 69.6% of global AUM. Product offerings grew by 26.7%, with 308 new products launched and 37 de-listed.

European assets fell 5.3% from 2010, to $298.5bn, or 19.6% of global AUM. Product offerings grew 13.3%, with 258 new products launched and 47 de-listed. Among European-listed equity ETPs, German equity ETPs were overwhelmingly popular, representing 97% ($17.3bn) of all flows.

Asia Pacific assets grew by 8.3% in 2011, totalling $92.6bn, which is worth 6.1% of global AUM. Product offerings grew 38.5%, with 123 new products launched and three de-listed.

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