Equity ETPs reach record high

Equity ETPs reach record high

Global exchange traded products (ETPs) had a “strong” 2013, where total inflows surpassed $200bn for the second consecutive year, according to new research by BlackRock.

Flows shifted “significantly” in favour of equities, particularly in December following the US Federal Reserve’s decision to start tapering its bond-buying programme, quantitative easing.

Equity ETP flows hit a record $247.3bn in 2013, overtaking 2008 which was the only other year when they went past $200bn. In December equity ETPs responded to the tapering decision by bringing in $28.9bn.

Fixed income flows of $27.5bn, while lower than 2012, remained strong thanks to investors pouring $35.9bn into short-duration ETPs.

Strategic beta equity – which BlackRock defines as non-market cap weighted equity ETPs – contributed a record $65.1bn of inflows in 2013 led by dividend-weighted funds, and nearly doubled the $34.2bn from last year.

Gold ETP outflows of $40.1bn in 2013 offset all inflows from the past three years combined, as the price of gold fell from its peak and investors turned to equities for more attractive returns.

Dodd Kittsley, global head of ETP research for BlackRock, said: “Total 2013 flows of $235.5bn surpassed $200bn for the second consecutive year, propelled by record inflows of $257.7bn from developed equity ETPs, as major developed equity indices tested historical highs this year.

“ETPs continue to attract a broad base of global investors, driven by regional regulatory developments, deepening ETF liquidity, and increasing awareness among both retail and institutional clients of the benefits of ETPs.

"These efficient tools are being used by all types of investors -- from capital market participants looking for liquidity, to pension clients seeking specialised exposures, to a growing segment of the market using ETFs as buy and hold investment vehicles.”