Global ETFs, ETPs attract 2nd-highest net inflows in December; down 26.7% for 2018

SINGAPORE - Exchange-traded funds (ETFs) and exchange-traded products (ETPs) attracted the second-highest net inflow on record globally, taking in US$76.24 billion during December 2018 despite turmoil in developed markets, independent research and consultancy firm ETFGI said on Thursday (Jan 10).

December's inflow was beaten by January 2018, which saw inflows of US$105.70 billion.

For the year, global ETFs and ETPs have seen inflows of US$516 billion in 2018, 26.7 per cent less than 2017's US$654 billion.

According to the consultancy's December 2018 Global ETF and ETP industry landscape insights report, assets invested in global ETF and ETP fell 5.28 per cent to US$4.79 trillion at the end of December from US$5.06 trillion at the end of November.

While the record US$5.26 trillion for assets invested in ETFs and ETPs in September 2018 marked an 8.6 per cent increase over 2017, assets invested in the global ETF and ETP industry ended down 0.6 per cent for 2018.

The consultancy said that substantial inflows during December can be attributed to the top 20 ETFs (by net new assets), which collectively gathered US$40.79 billion. The iShares 1-3 Year Treasury Bond ETF (SHY US) attracted US$3.36 billion, the largest net inflow in December.

At the end of December, the global ETF/ETP industry had 7,657 ETFs/ETPs, with 14,993 listings, assets of US$4.79 trillion from 401 providers listed on 71 exchanges in 57 countries.

"The end of 2018 saw the trend in developed markets reverse, and although arguably predictable, the severity left many pundits scratching their heads," said Deborah Fuhr, managing partner and founder of ETFGI.

"This end of year stress has widely been attributed to the disruption caused by trade disputes feeding into economic data, and the view policy makers are not going to be quite as accommodating as initially expected."

ETFs are typically open-end index funds that provide daily portfolio transparency, are listed and traded on exchanges like stocks on a secondary basis, as well as utilising a unique creation and redemption process for primary transactions.

ETPs refer to other products that have similarities to ETFs in the way they trade and settle, but do not use a mutual fund structure. The use of other structures including grantor trusts, partnerships, notes and depository receipts by ETPs can create different tax and regulatory implications for investors when compared to ETFs, which are funds.