In the investment world, the people have spoken with their wallets, turning to low-cost equities and bond exchange traded funds as their choice to access the various segments of the markets.
For the year ended Dec. 24, investors funneled a record $183.3 billion into exchange traded products, which include ETFs and exchange traded notes, bringing total global ETP assets to $1.34 trillion, reports Christopher Condon for Bloomberg. [U.S. Stock ETFs Remain Popular Amidst Fiscal Cliff Talks]
Bond ETPs attracted $55.7 billion while U.S.-related equity ETPs brought in $67.2 billion and internationally focused products added $48.5 billion. In contrast, $130 billion has been pulled from equity mutual funds.
“The story in the 2012 numbers is the incredible breadth of funds involved,” David Nadig, director of research at the San Francisco-based company, said in the Bloomberg article. “Even in the laggard columns, U.S. equity had 11 percent growth from inflows.”
“That U.S.-listed exchange traded funds are closing out 2012 with such strong asset-gathering — at or near a very considerable record — does engender a whole range of questions over the future of capital markets and especially equities,” Nicholas Colas, chief market strategist at CovergEx, said in a CNBC article. “The data is clear: ETFs aren’t just here to stay; they are here to conquer.”
Assets in ETPs have more than doubled since the end of 2008 as investors were attracted by the efficient and cost-effective fund structure. ETFs have an average expense ratio of about 0.55%, whereas the average expense ratio of equity funds was 0.79% at the end of 2011 and bond funds had an average 0.62% expense ratio, according to the Investment Company Institute.
Over the year, providers launched 176 new ETPs, including 104 exposed to equities, 42 in bonds, 18 in commodities, and 17 in the mult-class category.
For more information on ETF flows, visit our ETF performance reports category.
Max Chen contributed to this article.