ETP Analysis USA

ETPs continue their advance with inflows of $18bn in Sep & $156bn YTD...

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Equities advanced on mixed flows in September

September registered positive performance across most risky assets and more moderate returns for safe haven assets. Accordingly, Global Equities were slightly up by 0.94% during last month, led by EM equities with a 2.56% gain; while, Intl DM and US equities followed with returns of 1.34% and 0.21%, respectively. Fixed Income recorded moderate returns, with Inflation and HY exposures tilting to the positive side; while, US Treasuries recorded flat performance on the short and intermediate range, and losses of 1.51% on the long duration end. In the meantime, Commodities recorded positive performance of 4.31%; with Energy and Precious Metals recording a 5.10%, and 1.22% gain, respectively. On the Currency side, the USD weakened against most major currencies, suggested by the -0.56% drop in UUP.

ETPs approaching $2.4 trillion on healthy inflows of $18bn

During September, ETPs registered another solid month, reaching a new all-timehigh for assets driven by strong inflows into Equity and Fixed Income ETPs. Assets grew by almost 1% from the previous month and set a new record of almost $2.4 trillion of assets at the end of last month. This number was possible, in part, due to the $18.0bn in fresh new cash which ETPs attracted during the period. Equity, Fixed Income, and Commodity ETPs experienced positive flows of $9.0bn, $8.8bn, and $0.2bn, respectively.

Plenty of room for active managers amid a secular trend toward passive

With the secular trend toward passive investing difficult to dismiss, we see active & passive investment strategies coexisting in portfolios together in a more balanced fashion in the future. This should translate into further market share gains for passive strategies for at least the next 3-5 years, including a dramatic acceleration in 2017, until a better equilibrium is reached. In a detailed report, we focus on active/passive dynamics in the US mutual fund & ETF industry, and related distribution channels, and identify areas where active managers should continue to thrive vs. areas subject to further passive gains.

September came in second as the month with more new ETF launches ever

Just on the back of the month with the largest number of closures (41), September made the top 2 in terms of new ETF listings with 40 new products. However the mix was very different from February 2007 when we had 43 new ETFs. In 2007 most new products were leveraged or inverse, while last month most products were Smart Beta offerings, with only two leveraged or inverse ETFs.


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