June 29, 2012

ETFs Up 7% in 2012, Exceeding $1 Trillion, State Street Says

Dividend/fundamental ETFs remain the most popular category, as in 2011

Seventeen providers launched 100 new funds so far in 2012, SSgA strategist David Mazza says in his report. Seventeen providers launched 100 new funds so far in 2012, SSgA strategist David Mazza says in his report.

As of May 31, the U.S. ETF industry has more than $1.1 trillion in assets under management comprising 1,251 funds, growing by $75 billion since the end of 2011, for asset growth of 7.1%, State Street Global Advisors announced this week.

Amid signs the low interest rate environment will continue, U.S. exchange-traded funds saw more than $60 billion of inflows in the first five months of 2012, with dividend/fundamental ETFs the most popular category, as in 2011. Investors so far in 2012 have added $8.9 billion of inflows to dividend/fundamentals.

In addition, a total of 17 different providers launched 100 new funds, wrote State Street Global Advisors strategist David Mazza of SPDR ETF Strategy & Consulting, in his report, 2012 ETF & Investment Outlook: Sinking or Swimming?

“With one new entrant into the market, ETFs are now offered by 37 fund providers,” Mazza wrote. “Similar to years past, the top three (Blackrock, State Street and Vanguard) control over 83% of the market. Two SPDR ETFs, the SPDR S&P 500 (SPY) and SPDR Gold Shares (GLD), remain the world’s largest funds.”

Market participants continue to seek alternative sources of yield as major central banks around the world have signaled that they will maintain low interest rates into the foreseeable future, Mazza said. “They also increased their exposure to credit/corporate, government credit and high-yield bond ETFs,” he wrote.

In sharp contrast to 2011, the credit/corporate and high-yield segments within fixed income were the second and fourth most popular ETF categories. Last year, emerging markets were the most favored segment of the ETF market in the first quarter.

“This highlights the acute reversal in market sentiment exhibited over the first three months of this year,” Mazza said. “However, emerging markets experienced $4 billion of outflows in the more risk-averse months of April and May, muting the overall gains for 2012.”

Read ETP Assets Hit $1.2 Trillion by ETFGuide.com’s Ron DeLegge at AdvisorOne.

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