New global exchange-traded product (ETP) flow figures from BlackRock have underlined the bi-polar nature of investment year 2016.
According to the latest BlackRock ‘Global ETP Landscape’ report, annual record flows into the sector of almost US$380 billion were unevenly split – in volume and asset type – over both halves of the 12-month period ending December 31.
The BlackRock survey shows ETP inflows were flat in the first six months of 2016 totaling just US$121.5 billion, of which more than half were in fixed income while equity products picked up less than a quarter of the spoils.
However, total flows more than doubled to US$258 billion during the final half of the year with equity ETPs representing 87 per cent of the action as the appetite for fixed income products waned somewhat. ‘Other’ ETPs, including gold and commodity-based products, fell into negative territory during part two of 2016 after winning about a quarter of all business in the year’s opening sequence.
“Contrasting market conditions during the first and second halves of the year highlighted the ways investors are using ETPs to express their investment views,” the BlackRock report says.
Despite the whipsaw change in sentiment both equities and fixed income ETPs experienced record flows over the 12-month stretch, the latter asset class beating the previous chart-topping 2015 by “almost a third, representing organic growth of
24% and a third consecutive year where organic growth was
greater than 20%”.
“Persistently low interest rates bolstered investor adoption of fixed income ETPs in the first half of the year, particularly in higher yielding categories, driving new full year flow records in investment grade corporates with $32.6bn, US TIPS [Treasury Inflation-Protected Securities] with $11.1bn, and emerging markets debt with $11.0bn,” the BlackRock study says. “High yield corporates also brought in $11.2bn, near the full-year record from 2012.”
US large caps led the resurgence in the ETP equity sector over 2016 (US$82.3 billion) followed by broad emerging market products, which broke a three-year losing streak by pulling in US$26.7 billion during the annual period.
Total ETP assets jumped by more than US$543 billion to hit over US$3.5 trillion in the 12 months to end December 2016 as product numbers also ballooned to 6,053 from 5,865 the year prior.
While giving up about 0.6 per cent market share over the 12-month period, BlackRock-owned provider iShares retained its number one spot boasting almost 37 per cent of global ETP assets.
However, nearest rival Vanguard (about US$647 billion under management or 18.5 per cent of total ETP assets) gained 1.3 per cent market share over 2016, the only firm in the top 10 to report market share growth of more than 0.4 per cent.