The global exchange traded fund (ETF) and exchange traded product (ETP) industry has seen record activity levels due to an increasing number of institutional investors in the first quarter of the year.
Research conducted by independent consultancy firm ETFGI recorded net inflows of $73.4 billion in the first quarter of 2013, pushing assets in global ETFs to an all-time high of $2.09 trillion.
“The increasing number of institutional investors globally using ETFS and ETPs is an important factor driving the growth in net new asset flows as well as the growth in total assets under management,” ETFGI managing partner Deborah Fuhr said.
“Our analysis of reported share ownership of ETFs and ETPs using the Thomson Reuters share ownership database has found that the number of institutional investor that have used ETFs and ETPs globally has grown at a compound annual rate of 8.9 per cent in the five years to 2011.”
The research also found that in March, ETFs and ETPs saw $23.9 billion in net flows, with Equity ETFs and ETPs recording the highest, with $17 billion in net flows over the period.
It also found that $16.6 billion, or a majority of equity inflows, was invested in the US/North America exposure.
This was followed by $5.3 billion into the developed Asia Pacific, while emerging markets saw an outflow of $5 billion.
State Street Australian head of SPDR ETFs Amanda Skelly told InvestorWeekly that while this growth has been seen in an Australian context, domestic institutions generally look for niche strategies when investing in the ETF space rather than taking up local products.
“Most of the large institutions here are already using ETFs so in order of priority we’re seeing them look at some of the emerging markets that are harder to access,” Ms Skelly said.
“They’re also using ETFs for a commodities exposure, there’s quite a few using them for sector tilts, and lastly, we’re even seeing take-up in the developed markets with global equity ETFs.”
