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Equity ETPs reach record high
07 January 2014
Follows Fed’s recent decision to cut back on quantitative easing
exchange traded funds
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
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
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