Gold ETFs Lose Luster With Advisors as Fixed Income Funds Climb: Schwab

Independent advisors’ appetite for U.S. fixed income exchange-traded funds captured 54% of ETF inflows in 2011, and U.S. equity ETFs saw 33% of flows, but funds tracking international equities and commodities–and gold in particular–lost favor, says a new report released Monday by Charles Schwab.

The top 10% of registered investment advisors (RIAs) by assets under management have the bulk of their ETF assets in U.S. and international equity funds, at 62%, while smaller firms use U.S. fixed income ETFs 50% more than their larger peers, Schwab reported.

Strikingly, the report also shows that RIAs’ appetite for exchange-traded funds grew in 2011 as the overall market’s interest in ETFs declined.

RIAs held $60 billion in ETF assets at Schwab as of Nov. 30, up 5% from the end of 2010, and ETF trade volume among advisors was up 26%. This compares to Schwab’s overall cash inflows to ETFs through November, which declined from 2010, with eurozone jitters likely driving withdrawals from international equity funds, according to Schwab.

Alternative funds saw inflows decline in 2011 from 2010 due to independent advisors’ lower risk appetite, according to Schwab. ETF alternatives assets fell to 15% of flows in 2011 versus 24% in 2010.