Record Breaking Capital Exodus from ETPs

(September 11, 2013) — Exchanged-traded products (ETP) hit a record high in outflows in the last four weeks, totaling $16.5 billion, according to a report by Markit.

The analysis attributed weaker than expected earnings this quarter as a likely reason for the exodus from equity and fixed income ETPs.

The US market, almost 75% of the $2.1 trillion of global ETP assets, has been hit the hardest—$17.5 billion over the last four weeks.

SPDY S&P 500 exchanged-traded funds (ETF) saw $14 billion in outflows, a drop of almost 10% of the assets. ETPs based on S&P-listed consumer staples and financials, as well as Nasdaq 100 tracker fund, all suffered more than $1 billion of outflows.

Commodities were one of the few ETP categories to see inflows, which totaled $114 million last month. iShares Silver trust and the broader PowerShares DB commodity index tracking fund also benefited from significant inflows, helping ETFs recover some of the $22.3 billion of outflows suffered this year alone.

US investors turned to international funds, specifically the perceived safety of European markets. The Vanguard FTSE Europe ETF took $1.5 billion of inflows, with a year-to-date net inflow of $2.8 billion. European equity-based US funds boosted their assets by $4.7 billion.

Unlike US funds, European funds saw consistent inflows last month amounting to $1 billion. This was largely due to inflows to the blue chip Lyxor Stoxx 50 ETF and the iShares FTSE 100 UCIT ETF of $214 million and $118 million respectively.

These inflows were pushed by fixed-income funds seeing $1.29 billion of new asset flow.

Read the full report here.

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