Global exchange traded products experienced new record inflows in 2016 as the industry posted double digit growth.
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.
Small-caps experienced renewed attention as President-elect Donald Trump pledged an America First policy and vowed to put billions into the U.S. economy. Meanwhile, the dividend investment strategy has been a popular play this year as investors turned to the value style after growth outperformed for years.
Emerging market ETFs also brought in $26.7 billion in 2016, breaking a three-year streak of outflows as improved commodity prices, notably rising crude oil, and the more stabilized U.S. dollar ahead of the U.S. elections helped attract inflows.
Global ETPs saw $58.3 billion in net inflows over December 2016, totaling $3.505 trillion in net assets under management.
There were 1,951 U.S.-listed ETPs with $2.545 trillion in net assets under management as of the end of December 2016.
For more information on ETF flows, visit our ETF Performance Reports category.