Global exchange traded funds and exchange traded notes attracted $379.5 billion in net inflows in 2016, or 13% growth that exceeded the previous year’s record of $350.7 billion, as record demand for fixed-income assets and a second-half rally in U.S. equities, along with renewed demand for emerging market stocks, helped drive investment flows, according to a BlackRock note.
“ETP flows remained resilient throughout 2016 despite several periods of heightened uncertainty,” according to BlackRock. “Volatility at the start of the year subsided before spiking following the surprise outcomes of Brexit and the U.S. Presidential elections.”
The year 2016 started of on a rocky footing, which helped push demand for safer fixed-income assets. Bond ETFs attracted a new annual record of $115.0 billion, or 24% growth year-over-year, driven by new highs for investment-grade corporate bonds $32.6 billion, U.S. Treasury Inflation Protected Securities $11.1 billion and emerging market debt $11.0 billion.
In the second half of the year, U.S. equity flows surged led by large-caps with $82.3 billion, along with new annual flow records in the small-cap category $24.7 billion and dividend styles $23.0 billion.