Global asset flows for exchange-traded products (ETPs) recorded the best January on record with $40.2 billion inflows, according to the latest ETP Landscape Report from BlackRock, the owner of iShares.
Dodd Kittsley, Global Head of ETP Research at BlackRock.
Following a record-breaking year for global ETP flows in 2012 with $262.7 billion in net new assets, momentum continued in January. Investors favoured riskier assets as equities accounted for 94% of flows.
ETPs include exchange-traded funds (ETFs), exchange-traded commodities (ETCs) and exchange-traded notes (ETNs).
Emerging markets were a dominant trend. Emerging market equity ETPs gathered $13.2 billion in January, while emerging market bond ETPs drew solid flows of $400 million amid improving fiscal conditions in many emerging markets.
ETPs providing single-country access to emerging equity markets also saw strong inflows of $5.8 billion, with investors favouring China, South Korea and Mexico exposures.
Fixed income ETP inflows moderated, with $2.1 billion for the month, as investors moved out of Treasuries and into other higher-yielding areas of the fixed income universe. High-yield bond ETPs were the one of best asset-gathering products with $800 million of inflows.
According to Dodd Kittsley, Global Head of ETP Research at BlackRock: “After crossing the milestone figure of $2 trillion in total assets, the global ETP industry shows no signs of slowing down. The $40.2 billion in total net inflows this month was the strongest on record for the industry in January, surpassing the previous record last year of $33.5 billion.”
He added: “Investors have been encouraged by continued low interest rates, moderated concerns about Europe, an improved economic outlook in China, and acceptable earnings results from US corporations.”
Commenting on the continued growth in the ETP industry, Deborah Fuhr, Managing Partner at ETFGI, a London-based ETP research consultancy, said: “A growing number of institutional investors, financial advisors and retail investors are embracing the use of ETFs and ETPs for strategic and tactical asset allocations. ETFs provide greater transparency in relation to costs, portfolio holdings, price, liquidity, product structure, risk and return compared to many other investment products and mutual funds.”