The Exchange Traded Products industry recorded its best ever start to a year, attracting net new assets of $67.3 billion in the first quarter of 2012, a 57% increase over the $42.8 billion gained in the first quarter of 2011, according to the Q1 2012 ETP Landscape Report released by BlackRock. The first quarter 2011 figure had previously been the best annual start on record.

Further, the inflow for 2012’s first quarter outpaced 2011’s fourth quarter figure, of $44.8 billion, by 50%. The last time a first quarter out-collected a fourth quarter was in 1996.

Fixed income ETPs this quarter hit a new high with record quarterly inflows of $19.5 billion, topping the previous record of $14.7 billion set in the fourth quarter of 2011. The category accounted for 29% of all first quarter flows into ETPs.

Emerging markets equity products in the quarter topped all previous first quarters with record inflows of $13.7 billion. These results easily beat the previous record of just over $5 billion in first quarter 2006 and trounced 2011’s first quarter results when the category experienced outflows of $4.9 billion. The best quarterly result for the category was $18.5 billion in third quarter 2010.

Investors added $22.7 billion of North America equity exposure to their ETP portfolios in first quarter 2012, largely on trend with first quarter 2011 inflows of $18.7 billion and fourth quarter 2011 inflows of $21.4 billion.

Meanwhile, Europe equity ETPs saw $0.6 billion redeemed in the first quarter of 2012, building on a trend of $0.9 billion of outflows in the fourth quarter of 2011. This stands in contrast to the period of first-to-third quarters of 2011 when the category pulled in an average of $5.3 billion per quarter.

The market’s figures for the month of March were moderated, though.

March 2012 net inflows of $14.7 billion was slightly less than the $18.6 billion generated in February and a major drop from January’s $34.1 billion haul.

Fixed income ETPs took in a net $5.8 billion in March. Investment grade and high yield corporate bond ETPs pulled in $3.6 billion for the month and $16.5 billion in the first quarter, accounting for 85% of all fixed income inflows in that quarter.

Despite low yields, government bond products absorbed inflows of $0.8 billion in March, reducing the overall outflows to $1.5bn for the quarter.

Emerging markets equity products lost momentum, losing $1.0 billion in March, in comparison to the $14.6 billion poured into this category during the prior two month period. Broad EM exposure managed $1.3 billion of inflows on the month while single country exposures saw redemptions of $2.4bn with Taiwan, China, Brazil, Mexico and South Korea all contributing to outflows. Russia stood out with inflows of $0.3 billion.

Alternative products came in strong again in March with $1.7 billion on the month and $4.2 billion for the quarter driven by the success of volatility ETPs tied to the VIX index.

Over the last 12-months, 816 new ETPs were launched (while 90 were delisted), bringing the total number of ETPs to 4,450, a 19% increase over 3,724 products as of March 31, 2011.

Tommy Fernandez writes for Money Management Executive.



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