ETF Asset Growth Remains Strong in 2012

July 16th at 8:00am by Tom Lydon

Exchange traded fund assets rose about 11% for the first half of 2012, indicating asset appreciation and investor participation is strong. Most of the growth was seen over the first two months of the year.

“In the first six months of 2012, ETF assets increased $115 billion, or 11% from year end 2011, according to the ETF Industry Association. We attribute most of this increase to net cash flow into ETFs of $72 billion, and the remainder to asset value appreciation,” Tom Graves, S&P equity analyst, wrote in a recent note.

Most of this industry growth occurred in January and February  2012, when assets were up 13% to $139 billion. The stock market weakness and volatility caused the 2% decline seen from March through June, due to the ongoing Eurozone debt crisis and overall lack of global economic growth.

Equities accounted for most of the ETF asset growth, about 70%, through June 2012, followed up by the rise in commodities and fixed-income. Most of the new cash flow into equity ETFs could be attributed to outflows from mutual funds and single stocks, according to S&P Capital IQ. [Three ETFs to Safeguard a Portfolio]

Fixed income ETFs attracted net inflows for the 18th month in a row, through June 2012. Serena Smith for Fox Business reports that the sector more than doubled its cash inflow compared to one year ago. Last month $4.8 billion flowed into fixed-income ETFs,bringing the year-to-date total to $35.1 billion.

Vanguard MSCI Emerging Markets (NYSEArca: VWOgained the most new assets, up $7.52 million in 2012. The best-performing ETF this year so far was the iShares Dow Jones U.S. Home Construction Index Fund (NYSEArca: ITB), which gained 41.4%. [Homebuilder ETF Breaks Out to Its Highest Level Since 2008]

The newest ETF to attract the most assets was, of course, the PIMCO Total Return ETF (NYSEArca: BONDwhich gained $1.7 billion in new assets since March. There were 120 new ETFs to compete with that hit the market over the first and second quarters. [Why PIMCO Total Return is Beating Its Mutual Fund Counterpart]

Tisha Guerrero contributed to this article. 

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.