So much for a September sell-off. Flows into exchange traded products (ETPs) surged in September to their highest level since December 2008, sending global ETP assets under management to a new high of $1.84 trillion and marking the third-highest inflows ever recorded in a month.
What spurred the rush of activity? A triple play by the world’s central banks. On September 6, the ECB committed to buying short-term European sovereign debt, on September 13 the Fed announced fairly aggressive move to expand its program to purchase mortgage-backed securities and on September 19 the Bank of Japan announced additional stimulus measures.
Economists may wrangle over the effectiveness of monetary easing, but these stimulus measures apparently helped spark a risk-on rally. Investors turned to ETPs with global ETP flows showing a notable uptick in activity after September 6. Average daily flows after the ECB announcement rose to $2.7 billion, up more than 200% from the daily average of $0.8 billion for July and August.
In total, global ETPs added $43.3 billion in September. Equity funds amassed $34.7 billion of that number, with roughly $23.4 billion flowing into US equity funds alone.
When we drill down to US ETPs, we can clearly see how September’s stimulus from multiple central banks has bolstered flows in a far more sustained way than in 2010, when the Fed announced QE2.
Global ETP flows are now on a record-breaking pace for the year. Flows set a new January-to-September high of $182.6 billion, which surpassed the previous record high of $164.8 billion that was set in 2008.
Year-to-date, global ETP flows have already surpassed 2011’s full-year total of $173.4 billion.
Dodd Kittsley, CFA, is the Head of Global ETP Market Trends Research for BlackRock.