A record level of $152bn (£99bn, €138bn) in net new assets flowed into exchange traded funds and products (ETFs/ETPs) around the world in the first six months of 2015, according to preliminary data from research firm ETFGI.
The rise in net assets, particularly for equity ETFs which saw a big rise in June, came during a period when the Chinese stock markets fell by around 30% and the Greek crisis rattled markets around the world.
Globally the ETF industry had assets of $2.97trn by the end of June held in 11,295 listed products from 259 providers available on 62 exchanges in 51 countries, the London-based data provider said.
During June there were $24.8bn of inflows flow into ETFs globally with an overwhelming preference equity products, which accounted for $27.9bn of inflows. Commodity ETFs saw net outflows of $479m during the month and fixed income ETFs experienced net outflows of $4.0bn.
“Market performance in the first half of 2015 was impacted by a number of uncertainties: the situation in Greece and the impact on the Eurozone, when the Fed will raise interest rates, volatility in the Chinese market and the MERS outbreak in South Korea.” said Deborah Fuhr, managing partner of ETFGI.
The rise in net assets for equity ETFs during this period shows how their lower costs, growing popularity among retail investors, and increasing attractiveness as an alternative to other derivative products is changing the market.
Strategic use grows
“ETF’s are being used more and more for longer term buy and hold positions as opposed to tactical trading vehicles,” said Tim Huver, ETF Manager, for Vanguard in Europe.
Vanguard tied with BlackRock’s iShares in gathering the largest net ETF/ETP inflows in June with $8.1bn.
Huver said wealth managers, asset managers or even pension and insurance providers are using ETFs more and more as costs have come down as a long term buy and hold vehicles.
“Costs have been coming down considerably,” he said. Our asset-weighted TER (total expense ratio) is now 10 basis points so for longer term exposures, ETFs start to make sense. They are also competing with products like futures as well.”
