On the heels of a record-breaking December, global exchange traded product (ETP) flows continued to experience incredible momentum in January, surpassing the milestone figure of $2tn for the first time and finishing the month at $2.04tn in total assets.

This was the industry’s best January ever, with $40.2bn in inflows (breaking last January’s record of $33.5bn).

In addition to the blockbuster numbers, January also mirrored December in the decidedly risk-on nature of flows.  Equities accounted for 94% of flows while the fixed income category remained subdued.  While all equity segments attracted net inflows, emerging markets (EM) ETPs ‘emerged’ as the trend to watch.

Broad EM ETPs drew in $7.0bn, the highest monthly total for the category in more than three years.  EM single country ETPs also saw strong inflows of $5.8bn, with investors favoring China, South Korea and Mexico exposures.

For those looking to make a more tempered transition into riskier assets, ETPs offering “minimum volatility” strategies have been a vehicle of choice.  These products, which offer a way to access equities with the objective of reducing risk in the form of market volatility, have seen significant inflows in their relatively short lifespan, from ~$1bn at the end of 2011 to nearly $7bn at the end of January 2013.  January inflows alone for minimum volatility ETPs weighed in at $0.8bn.

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