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November ETF Landscape Report From BlackRock

November ETF Landscape Report From BlackRock

Appetite for fixed income exposure through ETPs increases, with $3.7bn in inflows in November

Gold continues to attract inflows as investors look to hedge the potential effects of global monetary easing programs, with $4.8bn in inflows

Global assets held in ETPs increase $61bn year to date, with $0.6bn outflows from October figures

London, December 7, 2011 – According to the latest “ETF Landscape” report from the BlackRock Investment Institute, fixed income ETPs have seen a surge of interest so far this year, as investors are increasingly choosing an indexed approach to fixed income investing.

During November, ETP investors also displayed a continued preference for gold, which is often viewed as a safe haven asset. However, announcements concerning a globally coordinated central bank liquidity operation brought attention back to risk assets at the end of the month.

The report shows that the global ETP marketplace had assets under management of $1.543 trillion as at the end of November 2011, an increase of $61bn or 4.1% on a year to date basis. The total number of ETPs increased slightly to 4,200 from 4,152 at the end of October.

The global exchange traded products industry experienced outflows of $0.6bn in November compared with October figures. The European debt crisis, as well as the failure of U.S. legislators to devise a long-term deficit reduction proposal, has prompted many investors to adopt a ‘wait and see’ approach and to focus on re-allocating assets rather than committing new money.

Fixed income ETPs, the next phase of the ETF revolution?

Fixed income ETPs have gathered $43.6bn, or 31.6%, of all assets flowing into the ETP industry so far this year, as investors are increasingly choosing ETPs to access global fixed income markets. November saw a continuation of this trend, with fixed income ETPs gaining $3.7 billion in net new assets.

Furthermore, globally ETPs accounted for 33% of all new money that flowed into all bond funds during the first three quarters of 2011. In 2009 and 2010 by comparison, ETPs accounted for 11% and 10% of assets flowing into bond strategies respectively. By contrast, actively managed bond funds have seen inflows for the first three quarters of 2011 drop to $70 billion from $200 billion in the first three quarters of 2010.

“In the current and extended low-yield environment, we believe that ETPs are attracting huge interest from investors who are eager to seek yield, manage their costs and generally have more control over their fixed income investments,” commented Kevin Feldman, Managing Director at BlackRock. “This is a truly revolutionary development, signalling that an indexed approach to fixed income investing is becoming as commonplace and as valued as an indexed approach is in the equities space.”

“In turn, the number of fixed income ETPs on offer has mushroomed from 122 in 2007 to 591 today, with more than 110 launched this year alone, and this growth in product range is likely to continue. Providers will be looking at ways they can offer both broad and niche exposures to global bond markets, and this will allow investors to implement customized fixed income asset allocations that mix sectors, geographies, and risk profiles much as they do today for equities.”

Gold ETPs attract more new assets than any other category

Commodity ETPs gathered the most global assets of any category during November 2011, with investors strongly favoring gold. Gold ETPs attracted $4.8 billion, making November the sixth consecutive month that gold has attracted net new assets. Gold ETPs have gathered $12.1 billion so far this year, far outpacing all other commodity categories, which have collectively seen net outflows of $1.7 billion.

“Price volatility in global commodity markets has not dampened the market’s enthusiasm for gold, particularly among both central banks and ETP investors,” commented Mr. Feldman. “Ongoing speculation about significant future global monetary easing has been favorable for the commodity, as investors recognize that central banks have the capability to expand the global money supply rapidly, and gold provides a potential hedge for this scenario.”

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About the BlackRock ETF Landscape Summary Report

The “ETF Landscape” reports provide a snapshot of ETP assets under management and asset flows at a combined global level and various regional levels as of the most recent month-end period. The ETP category comprises any portfolio exposure product that trades intra-day on an exchange, including exchange traded funds (ETFs), exchange traded commodities (ETCs), exchange traded notes (ETNs) and exchange traded instruments (ETIs). ETPs are used today for a wide variety of both strategic and tactical portfolio applications, from implementation of broad market strategies, adjustment of portfolio drift and addition of uncorrelated asset classes, to cash and exposure management and as an alternative to derivatives.

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