Source, a European joint venture ETF platform which commenced operations earlier this year, has reported nearly €650 million (US$950 million) in inflows to its new DJ Stoxx 600 optimised supersector ETFs in their first two months of trading.

Source launched its range of optimised pan-European sector ETFs on July 27. They differ from the standard, capitalisation-weighted DJ Stoxx 600 sector ETFs in that they specifically address issues such as concentration, diversification, liquidity and the availability of stocks to borrow. IndexUniverse.eu reported on the index methodology and the funds’ launch here and here.

Meanwhile, European sector ETFs in general (including the capitalisation-weighted DJ Stoxx 600 supersector ETFs offered by iShares, db x-trackers, Lyxor and Comstage, as well as Source's optimised sector ETFs) are attracting new assets at an accelerating rate, according to a new publication from Barclays Global Investors (BGI). The latest BGI Dow Jones Stoxx 600 Net Flows report reveals that year-to-date net inflows to all ETFs tracking DJ Stoxx 600 sector equity indices now total over US$1.3 billion (as of 18 September 2009).

BGI’s analysis shows that nearly half of these net inflows occurred in the five weeks to 18 September 2009.

Source claims that its sector ETFs offer substantially higher trading liquidity than competing products. According to the issuer, its optimised sector ETFs have seen daily turnover topping 20% of outstanding assets, many times higher than the 1.5% turnover that is the average on-exchange liquidity across the European ETF market. Source’s sector ETFs represent 13% of outstanding European sector ETF assets, the issuer says, but on peak days they represent over 50% of market trading volumes.

Source’s total exchange-traded product assets have reached €1.5 billion (US$2.2 billion), the issuer reports. This places the London-based ETF promoter thirteenth in a list of European ETF/ETC issuers, when ranked by total assets under management, according to the latest edition of Deutsche Bank’s ETF Liquidity Trends report. iShares (with €53.8 billion), Lyxor (€27.2 billion) and db x-trackers (€22.6 billion) continue to occupy the top three places in the table of European exchange-traded product assets under management.

Source’s CEO, Ted Hood, said: “The speed with which the market has embraced our new optimised sector products has amazed us.  We believe that the market has been waiting for a set of products that are fully functional and combine trading efficiency, improved counterparty risk profile and a set of indices designed to address the needs of both traders and investors.”