When investors look back on 2012, chances are many of them will remember all the economic uncertainty the world experienced – sluggish growth, the Eurozone crisis, the fiscal cliff.
However, given the many records broken by the global exchange traded product (ETP) industry in 2012, investors may also remember using ETPs to help navigate the year’s uncertainties.
In addition to breaking the record for global annual flows, the ETP industry also saw record inflows in a number of regions and asset classes. December collections of $39bn brought global net inflows for the year to $262.7bn total, just edging out the previous record of $259bn set in 2008 (another year of uncertainty, you may recall). Inflow records were also set in the US, Canada and Asia.
Fixed income and emerging market equity ETPs were the big winners for the year, with both categories setting new annual flows records at $70bn and $54.8bn, respectively.
While most segments of the fixed income market saw growth, the higher yielding categories emerged as the year’s big winners. Sectors such as investment grade corporate bonds, high yield bonds and emerging market debt all attracted large inflows, while US Treasury ETPs had outflows of $2.4bn.