Investor caution over US restricts inflows of assets into ETFs

Global exchange traded funds and exchange traded products saw net new asset inflows of $13.5bn in October, according to ETFGI, a consultancy established by sector expert Deborah Fuhr. In September 2012, the sector registered net inflows of $40bn.

“Investors and investments suffered from growing uncertainty in October over the likely outcome of the US presidential election, the impact of the fiscal cliff in the US, the likely impact of superstorm Sandy and the on-going debt concerns in the Eurozone,” ETFGI said.

US listed ETFs and ETPs which traditionally account for the majority of net new assets, saw these uncertainties dampen the inflows into ETFs and ETPs listed in the US to just $2.7bn or 20% of net new assets in October. Globally, ETFs and ETPs providing exposure to North America equities also suffered from these concerns as investors withdrew $10.1bn.

Elsewhere, fund flows were unaffected by concerns over the US. “We saw robust flows into ETFs and ETPs listed in both Europe, which accounted for $4.6bn, or 34% of total net new assets. Asia Pacific (ex Japan) amassed $4.5bn, or 33.7% of the total. Products listed in Japan, Canada, Middle East and Africa and Latin America accounted for $1.7bn.

Deborah Fuhr, Managing Partner at ETFGI, said: “The source and composition of the fund flows in October shows that ETFs and ETPs are a product set that are increasingly being embraced by investors around the world and are a very good indicator of how investors are tactically and strategically adjusting their allocations to political, economic and other uncertainties that are impacting the markets.”

At the end of October 2012, the global ETF and ETP industry had 4,694 ETFs and ETPs, with 9,646 listings, assets of $1.85trn, from 203 providers on 56 exchanges. Year-to-date global ETFs and ETPs have gathered $201.7bn of net new assets.

Year-to-date through the end of October, equity ETFs and ETPs have gathered the largest net inflows, accounting for $114bn, followed by fixed income ETFs and ETPs with $57bn, and commodity ETFs and ETPs capturing $20bn. 

Equity-focused ETFs and ETPs have gathered $3.2bn in October and $114bn year to date, which is $23bn more than the flows they received in all of 2011. In October, investors withdrew $10.1bn from ETFs and ETPs providing exposure to North American equity indices, and invested $8.8bn into ETFs and ETPs providing exposure to emerging market equity indices.

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