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Assets invested in Exchange Traded Funds (ETFs)and Exchange Traded Products (ETPs) listed in Asia Pacific (ex-Japan) reached a new all-time high of $94.1 billion at the end of January 2013. ETF and ETP assets have increased by 6.6% from $88 billion in December 2012 to $94.1 billion at the end of January, according to figures from ETFGI’s monthly Asia Pacific (ex-Japan) ETF and ETP industry insights.
Market performance contributed to the increase in the value of assets held in ETFs and ETPs as 18 of the top 20 markets globally showed gains in January. Four of these indices were located in Asia Pacific (ex-Japan); the CSI 300 was up 6.5%, the S&P/ASX 200 was up 4.9%, the BSE Sensex 30 was up 2.4% and the Hang Seng was up 4.7%. Two other markets with strong gains were in the US and the UK where history has shown that a strong January tends to be a good predictor for the rest of the year. A review of history in both markets shows that strong January performance is typically followed by positive returns in the subsequent 11 months.
In January 2013, ETFs/ETPs listed in Asia Pacific (ex-Japan) saw net inflows of $2.1 billion. Equity ETFs/ETPs gathered the largest net inflows with $1.8 billion, followed by leveraged ETFs/ETPs with $404 million, and fixed income ETFs/ETPs with $30 million, while inverse ETFs/ETPs experienced the largest net outflows with $148 million.
“The flows into the equities show investors risk appetite is increasing as investors are feeling more confident as global economic concerns over corporate earnings, US debt ceiling, US housing market, US job outlook and the outlook for the Eurozone seem to be improving. There are signs of a rotation out of fixed income into equities,” according to Deborah Fuhr, Managing Partner at ETFGI.
Within equities, emerging market equity ETFs/ETPs gathered the largest net inflows with $2 billion, while developed Asia Pacific equity ETFs/ETPs experienced the largest net outflows with $185 million.
In January 2013, fixed income ETFs/ETPs saw net inflows of $30 million. Government bond ETFs/ETPs gathered the largest net inflows with $98 million, followed by money market ETFs/ETPs with $25 million, while emerging market bond ETFs/ETPs experienced the largest net outflows with $102 million.
In January 2013, commodity ETFs/ETPs saw net inflows of $3 million. Precious metals ETFs/ETPs gathered the largest net inflows with $14 million, while broad commodity ETFs/ETPs experienced the largest net outflows with $7 million.
“A growing number of institutional investors, financial advisors and retail investors are embracing the use of ETFs and ETPs for strategic and tactical asset allocations. ETFs provide greater transparency in relation to costs, portfolio holdings, price, liquidity, product structure, risk and return compared to many other investment products and mutual funds.” according to Deborah Fuhr, Managing Partner at ETFGI.
At the end of January 2013, the Asia Pacific (ex-Japan) ETF/ETP industry had 432 ETFs/ETPs, with 554 listings, assets of $94.1 billion, from 92 providers on 14 exchanges. China AM gathered the largest net ETF/ETP inflows in January with $2.6 billion, followed by iShares with $555 million and Samsung AM with $419 million net inflows.
SPDR ETFs is the largest ETF/ETP provider in terms of assets with $14.2 billion, reflecting 15.1% market share; iShares is second with US$10.8 billion and 11.5% market share, followed by China AM with $9.2 billion and 9.7% market share. The top three ETF/ETP providers, out of 92, account for 36.4% of Asia Pacific (ex-Japan) ETF/ETP assets, while the remaining 89 providers each have less than 9% market share.
CSI has the largest amount of ETF/ETP assets tracking its benchmarks with $28 billion, reflecting 29.8% market share; FTSE is second with $15.9 billion and 16.9% market share, followed by Hang Seng with $15.2 billion and 16.1% market share.
ETF and ETP average daily trading volumes increased by 14.9% from $1.8 billion in December 2012 to $2.1 billion in January 2013.
