Exchange-traded products (ETPs) have continued their global growth, attracting US$168 billion in new net cash inflows for the year ending 31 December 2011, according to a study by State Street Global Advisors (SSgA).
The asset manager believes exchange-traded funds (ETFs) will also continue to attract investors in 2012 as they seek transparent and liquid investment options which have the possibility of earning above-market returns.
The results of SSgA’s study – ‘ETPs Amidst the Continuing Global Financial Recovery: 2011 Recap and Shifting Dynamics in 2012’ – revealed that ETFs, exchange-traded commodities and exchange-traded notes increased total assets under management by US$50 billion in 2011 compared to 2010.
According to SSgA, 2011 inflows favoured developed markets, which saw net inflows of US$145 billion across fixed income, equities, currency, alternatives and commodities. The total number of ETPs also increased, expanding from 3,667 in 2010 to 4,458 in 2011.
From the second quarter to the end of the third quarter, global investors moved towards a more risk-averse position, which saw investors selling off high beta markets like emerging markets and opting for traditionally safer assets in the developed world, SSgA stated.
"This move has ultimately led to a need for deeper liquidity and more transparency, which has translated into huge growth in demand for exchange-traded products globally," said SSgA head of SPDR ETFs for Asia Pacific Frank Henze.
"People who are moving from the wealth creation phase into the capital protection income generation phase of the investment lifecycle are naturally concerned about their exposure to volatile equities."
The report stated that the Asia Pacific is a particular area of growth for ETPs. Assets under management have grown there to US$105.8 billion at the end of 2011, representing a growth rate nine times higher than the global growth rate.
Henze added that fixed income yields in Australia – which is the ninth largest exchange in Asia Pacific ranked by ETP turnover (US$7.76 billion in 2011) – is "looking very attractive compared to other international jurisdictions."
