Assets invested globally in Exchange Traded Funds (ETFs) and Exchange Traded Products (ETPs) broke through the $2 trillion milestone at the end of January 2013 to reach a new all-time high of $2.05 trillion. ETF and ETP assets have increased by 5.2% from $1.95 trillion to $2.05 trillion during January, according to figures from ETFGI's monthly Global ETF and ETP industry insights.
Market performance contributed to the increase in the value of assets held in ETFs and ETPs as 18 of the top 20 markets globally showed gains in January. Two of the markets with strong gains were the U.S. and the UK where history has shown that a strong January tends to be a good predictor for the rest of the year. A review of history in both markets shows that strong January performance is typically followed by positive returns in the subsequent 11 months.
The FTSE 100 index was up 6.5% in January, which ranks as the best start to the year since 1989. According to FTSE, 14 of the 17 Januaries with positive performance since 1984 (when the index was launched) were followed by 11 months of positive returns. Similarly, the S&P 500 index was up 5.0% in January, which ranked as the 12th best January since 1950 and the 19thJanuary since 1950 when the index was up more than 4%. Again, since 1950, January gains of at least 4% in the S&P 500 have been followed on average by gains of 15.1% in the subsequent 11 months of the year. Only once since 1950 did the S&P 500 rise by more than 4% in January and then finish the year lower than it did at January's end -- and that was in 1987.
Investors allocated $34.5 billion of net new assets to equity ETFs and ETPs in January. This continues a trend that began in December 2012 when $36.2 billion of net new assets were allocated to equity ETFs and ETPs. Overall, $37.3 billion of net new assets were allocated to ETFs and ETPs in January 2013, an 8% increase on the $34.5 billion of net inflows in January 2012 and in line with the $37.8 billion in December 2012. During January 2013, fixed income ETFs and ETPs gathered just $1.4 billion while commodity ETFs and ETPs saw net outflows of $411 million.
"The flows into equity ETFs and ETPs show an increasing investor confidence as global economic concerns over corporate earnings, US debt ceiling, US housing market, US job outlook and the outlook for the Eurozone seem to be improving,"says Deborah Fuhr, Managing Partner at London-based ETFGI. "Additionally, there are signs of a rotation out of fixed income into equities."
Equity focused ETFs and ETPs providing exposure to North America were the most popular this January, receiving $14.6 billion. Emerging market equities were in second place with $10.7 billion and global (ex-US) equity exposure came in third with $3.0 billion.
Fixed Income ETFs and ETPs gathered only $1.4 billion, with $1.2 billion invested in high-yield exposure and $720 million in corporate bond ETFs and ETPs. Government bond, money market and mortgage-backed products experienced net outflows of $544 million, $332 million and $302 million respectively.
Commodity ETFs and ETPs had net outflows of $411 million over the course of January. ETFs and ETPs providing exposure to precious metals experienced net outflows of $1.4 billion and energy ETFs and ETPs had net outflows of $453 million. Meanwhile investors moved $964 million into ETFs and ETPs offering broad commodity exposure.
"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," says Fuhr. "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."
At the end of January there were 4,766 ETFs and ETPs with 9,813 listings and assets of $2.05 trillion. The products were from 209 providers and were listed on 56 exchanges. iShares gathered the largest net new ETF and ETP inflows in January with $14.5 billion followed by Vanguard with $11.4 billion while SPDR ETFs experienced net outflows of $1.5 billion. iShares is the largest ETF/ETP provider in terms of assets with $798.5 billion, reflecting 39.0% global market share; SPDR ETFs is second with $347.3 billion and 16.9% market share; and Vanguard is third with $265.5 billion and 13.0% market share. These top three ETF/ETP providers account for $1.41 trillion, or 68.9%, of global ETF/ETP assets, while the remaining 206 providers each have less than 4% market share.
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United States listed ETFs and ETPs
European listed ETFs and ETPs
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Note to editors
ETFs are typically open-ended, index-based funds, with active ETFs accounting for less than 1% market share. They can be bought and sold like ordinary shares on a stock exchange and offer broad exposure across developed, emerging and frontier markets, equities, fixed income and commodities. ETFs are used widely by institutional investors and increasingly by financial advisors and retail investors to:
- equitize cash
- implement diversified exposure to a market
- comprise a core or satellite investment
- be a long term strategic investment
- implement tactical adjustments to portfolios
- use as building blocks to create entire portfolios
- allow investors to hedge the market
- use as an alternative to futures and other derivative products
Exchange Traded Products (ETPs) are products that have similarities to ETFs in the way they trade and settle but do not use an open-end fund structure. The use of other structures including unsecured debt, grantor trusts, partnerships, and commodity pools by ETPs can, in addition to a significantly different risk profile, create different tax and regulatory implications for investors when compared to ETFs, which are funds.
Established by industry expert Deborah Fuhr and partners, ETFGI is a wholly independent research and consultancy firm providing services to leading global institutional and professional investors, the global exchange-traded fund and exchange-traded product industry, its regulators, its advisers and its investors. The partners leverage extensive industry experience, unparalleled industry contacts and rigorous analysis to deliver proprietary research on the global ETF and ETP industry.
ETFGI offers an annual paid subscription service that provides: 1) the monthly ETFGI Global ETF and ETP Industry Insight report, which will provide a detailed analysis of the Global ETF and ETP industry, analysing net new asset flows into asset classes, products and managers, index provider rankings, broker rankings and new product launches, as well as numerous other metrics; 2) a directory of ETFs and ETPs; and 3) access to tools via the ETFGI’s annual paid subscription service providing detailed monthly Insight reports and a monthly directory covering the entire global ETF and ETP industry, including the providers, index providers, exchanges, banks and brokers and products (4,770 ETFs and ETPs, across 9,817 exchange listings from 209 providers on 56 stock exchanges with assets of $2.05 trillion at the end of January 2013.) Regional and country analysis are provided as part of the 200-page report.
ETFGI offers a full range of consulting services covering the spectrum of the exchange traded universe from data and analytics to assistance in understanding product structures, due diligence on products and service providers, from distribution and capital market challenges to governance and regulatory environment. ETFGI provide services to both new and experienced institutional and professional investors interested in using and comparing ETFs and ETPs and better understanding the industry, product, regulatory and company specific data points.
The soon-to-be launched website www.etfgi.com will allow investors to search for and compare the nearly 5,000 ETFs and ETPs which have almost 10,000 listings from over 200 providers on 54 exchanges. Investors can subscribe for a country or regional view of the ETF and ETP database if that better suits their investment or research requirements.
Deborah Fuhr is a partner and co-founder of ETFGI, an independent research and consultancy firm established in early 2012, which researches and consultes on the global ETF and ETP industry. The firm is focused on providing thought leadership, publishing independent research on the industry, its products, applications, and competitors, and provides education and assistance to investors on product comparison, asset allocation implementation as well as offering customised research. The annual paid subscription service provides detailed global analysis of the industry monthly, a directory of ETFs and ETPs and access to the ETFGI database on a country, regional or global basis to allow investors to find and compare ETFs and ETPs across various characteristics in order to build a single or multi-faceted analysis in line with individual investment or research requirements.
Previously Ms. Fuhr was the Global Head of ETF Research and Implementation Strategy and a Managing Director at BlackRock/BGI from Sept 2008 – Oct 2011. The team won a number of awards.
Previously she was an Associate at Greenwich Associates the premier strategic consulting and research source for providers and users of financial services worldwide.
In 2012, 2009, 2008 and 2007, Ms. Fuhr was named as one of the Top 100 women in Finance, a distinguished list of the most influential women in European Finance, by Financial News.
She has an MBA from the JL Kellogg Graduate School of Management, Northwestern University, and Bachelor of Science from the University of Connecticut.
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