Net inflows into exchange-traded funds in the first half of 2010 beat inflows into ETFs in the previous year, according to State Street Global Advisors, the investment management business of State Street Corp.
ETF industry assets in the United States fell 0.4% during the first half of 2010, as investors held $772 billion in 897 ETFs as of June 30, 2010, State Street Global Advisors reported. During the same period, the Standard & Poor’s 500 Index slid 8.9%.
ETFs are used as part of clients’ actively-managed portfolios and are therefore experiencing better results, said Geoffrey Bobroff of Bobroff Consulting in East Greenwich, R.I., in a phone interview on Thursday. The significant growth in ETFs has been in bond funds, he said, as investors move out of the risk curve.
State Street [STT] pointed out three key trends that helped shape the ETF industry during the first six months of 2010: First, there was continued growth of fixed income ETF assets, which increased 78% in 2009 and 21% in the six months to June 30, 2010, as the number of bond ETFs available to investors reached 105.
In 2006, just six fixed income ETFs existed. Secondly, gold ETF assets soared 30.2% during the first half of the year, reaching new highs as investors worried about the sovereign debt crisis and the slow economic recovery in the United States. And lastly, the "Flash Crash" on May 6, 2010 did not hurt investor confidence in ETFs, with net new inflows into ETFs totalling $20.2 billion in May and June.
“Despite the market's performance during the first half of 2010, ETF net inflows are ahead of last year's pace,” said Tom Anderson, director of strategy and research for the Intermediary Business Group at State Street Global Advisors, in a press release. “This growth has been driven by financial professionals, individual investors and institutions, and underscores the way investors build and maintain portfolios in every market cycle using these innovative investment products.”