Exchange-traded products (ETPs) have attracted inflows of $419.2bn in 2017, exceeding 2016’s full-year flow record of $378.4bn, with developed market equity exposures leading the charge, says BlackRock.
Global exchange-traded products gathered $47.4bn in August, driving year-to-date flows to a new annual record, fuelled by strength in developed-market equity exposures and bolstered by fixed-income, BlackRock, the world’s largest asset manager, said on Monday.
The size of SA’s ETP industry, though, had remained fairly static for the past three years, following rapid growth between 2008 and 2013, said etfSA. This was a reflection of the "stagnation of the value of local markets, rather than a lack of activity in the ETF [exchange-traded funds] industry", the ETP provider said.
The total market capitalisation of all JSE-listed ETFs and exchange-traded notes at June 30 was R79.7bn, an increase of 7.5% on December 2016.
BlackRock reported that US equities attracted $103.5bn this year, with other developed market equities and Japanese equities drawing in $75.9bn and $41.7bn, respectively, on positive economic data. Emerging market equities attracted $33.2bn to the end of August, with emerging market debt flows of $14.8bn ahead of last year’s full-year record, BlackRock said.
The growth in ETP over the past two decades has been staggering, with more than 4,000 institutional investors now using ETFs, up from 154 in 1997, according to Deborah Fuhr, partner and co-founder at research consultancy, ETFGI. Global ETF assets amount to $4.1-trillion, about $3-trillion of which is in US ETFs. Just three asset managers — BlackRock’s iShares, Vanguard and State Street — command more than 80% of passive industry assets globally, said Fuhr.
A recent Nedgroup Investments survey of local investment decision-makers found that two-thirds used rules-based funds including traditional passive and smart-beta strategies, largely in conjunction with active solutions. At R181bn, the rules-based market made up just 4% of the more than
R4-trillion in assets in the South African investment market, excluding the Public Investment Corporation.
"This year, we’ve seen the most ETF listings in recent times, with more expected before the end of the year," said Nerina Visser, ETF strategist and adviser at etfSA. There had been a notable creation of new units within existing ETFs, indicating strong demand for the products, she said.
The ETP industry raised R3.4bn in capital via new listings on the JSE in the first six months of 2017. The new listing of Krugerrand and US dollar custodian certificate ETFs by FNB, which raised R1.9bn, dominated this. New issues of commodity ETFs by NewGold raised about R1.1bn, said etfSA.