Net inflows into exchange traded products reach €41 billion

New report highlights asset flows for Exchange Traded Funds, Exchange Traded Notes and Exchange Traded Commodities – collectively known as exchange traded products (ETPs)
A new report by iShares, the world’s leading exchange traded fund (ETF) provider, shows that net inflows into exchange traded products (ETPs) have risen significantly gathering €41 billion over the past 12 months, with demand for broad based European funds, commodity and fixed income funds particularly strong.
Overall assets under management for European ETPs are now a substantial €137 billion representing a 28% increase in asset levels over the past year.
‘Trends in Asset Flows and Assets under Management’ provides an overview of broad market trends in European ETP asset gathering across all product providers. It is designed to alert investors to emerging trends within the ETP market.
Summary of the key findings (to the 12 months to the end of July 09):
• Net inflows into ETPs have remained positive, with total new inflows of €41 billion (€19 billion year to date) and assets under management in European ETPs rising to over €137 billion.
• European asset flows have been spread broadly. Regional products (which represent regional equity benchmarks) saw the largest inflows of €11 billion or 28 percent of total inflows, with the most substantial flows into broad Pan-European ETFs followed by Global Regional benchmarks such as MSCI World and MSCI Emerging Markets.
• Fixed income funds claimed 16 percent of total new assets, with the bulk of these flows in corporate bonds and short-term government bonds at the expense of money market ETFs (which have experienced outflows of €1.1 billion year to date).
• Commodity products saw inflows of €6.4 billion, representing almost 16 percent of total flows, with 73% of flows going into precious metals, which is predominantly gold.
• European country ETFs saw inflows of €6.6 billion, which was 16% of total flows and in line with their share of assets under management but lagging in broader regional flows.
• Outside of the European equity ETFs, in the current year, emerging market country funds have seen a dramatic rise in activity with over €2bn of assets flowing into China and Brazil. The US market dominated flows into developed country ETFs.
Nizam Hamid, head of sales strategy, iShares Europe, commented: “This report shows demand for exchange traded products continues to grow particularly as investors look to transparent and highly liquid products with which to invest.
"The key findings have been the strength of flows into regional products which reflects investors’ demand for broader based indices, and increased flows into emerging market ETPs, which reveals their confidence in enhanced recovery prospects for emerging market economies.
 “Commodities, especially in the current year, have been an important area of investor interest and can, in part, be viewed as a continuation of the trend to invest in products that provide a hedge against inflationary pressure.
“Fixed income funds – where there has been a flurry of product launches over the past 12 months – have also experienced significant positive inflows in the period, despite the outflows from money market related ETFs. This demand shows how investors value ETFs by helping to create a more balanced risk managed portfolio.”