European ETF Trading Slows, Assets Growing
November 06, 2012
[This article originally appeared on our sister site, IndexUniverse.eu.]
European ETF trading slowed in October, with average daily trading volumes decreasing by 15 percent from a month earlier, according to data from specialist research firm ETFGI.
However, while trading has slowed, investors are continuing to put their money into the ETF market, with net inflows reaching U$3.8 billion in October, says ETFGI.
Since the beginning of the year European ETF assets have increased by 16.9 percent, from $268 billion at the end of December 2011 to $313 billion at the end of last month, says the research firm. About $20 billion of the $45 billion increase has come from net new cash flows to ETFs, with the remainder down to a rise in market indices.
“October was another strong month for European ETFs with $4 billion of inflows, Gordon Rose, analyst at ETF data provider, Morningstar, told IndexUniverse.eu. “Flows generally vary from month to month and as long as we don’t see a substantial market drop, there is no reason for concern. Therefore, any slowdown is probably just down to market sentiment.”
“The worst of the crisis has now been priced in and equities are looking very cheap at the moment,” Rose added.
iShares continued to capture the largest ETF inflows in October, collecting $2.6 billion, around two-thirds of European investors net purchases. SPDR ETFs and Lyxor gathered net inflows of $454 million and $442 million, respectively, during the month.
For Lyxor the inflows will be a welcome boost, taking the firm’s net cash flows into the black by $319 million for the year to date. Lyxor suffered nearly $10 billion of outflows from its ETF range in 2011, dropping from second to third in the provider rankings, after iShares and db x-trackers.
Synthetically replicated, or derivatives-based, ETFs continue to lag physically replicated ETFs in the popularity stakes.
Of Europe’s 1,326 ETFs, 513 are physical while 806 are synthetic. However, since the beginning of the year physical ETFs have had net inflows of $17.7 billion, compared with only $1.7 billion received by synthetic ETFs, according to ETFGI.
Global ETF inflows were down on the previous month, reflecting much slower sales in the US market. They reached $9.5 billion, a substantial drop from the $43.3 billion recorded in September, according to BlackRock.