The exchange traded fund industry attracted new record inflows over the first quarter as investors flocked to developed market equities.
The global exchange traded product industry, which include both ETFs and exchange traded notes, saw $70.1 billion in new inflows, compared to the previous quarterly record of $65.5 billion last year, according to a BlackRock research note. [Record Inflow for ETFs Despite Selling in Largest Stock, Gold Funds]
With confidences in the stock market returning, equity funds brought in $65.1 billion, or 93% of the first quarter inflows, driven by funds with U.S. exposure, which accounted for $37.3 billion. Broad-based developed markets exposure added $11.2 billion, with Japan equity attracting $8 billion.
Meanwhile, emerging market equity interest slowed but still saw a positive $4.6 billion due to a shift in investor sentiment.
According to BlackRock, asset categories with the highest growth rates include Japan equity, which added 24%, dividend income equity, which was up 20%, homebuilders, which grew 38%, minimum volatility equity, which expanded 76%, and floating rate bonds, which rose 83%.
“The wide variety of unique exposures that ETPs offer, from Japanese equities to short-term fixed income and minimum volatility, has been a crucial factor in the industry’s strong ongoing growth,” Dodd Kittsley, Global Head of ETP Research at BlackRock, said in the research note. “Flows through the first quarter reflect how ETP investors can reposition their portfolios to act on market opportunities that they see emerging, even in the midst of continued macro uncertainty.”
Fixed-income assets still attracted their fair share of interest, adding $11.6 billion over the first three months, the 8th consecutive quarter of inflows of at least $10 billion. However, ultra short-term, short-term and floating rate exposures garnered the lions share at $9.4 billion as investors sought a hedge to interest rate risk.