Strong continuing interest in emerging markets has helped boost growth in exchange-traded products to 14% in the third quarter of this year, according to research from Deutsche Bank.
Inflows of $25.7bn mean that equity emerging market ETFs accounted for 60% of ETP market growth this quarter, which is up sharply from just 0.1% in Q2.
Although interest in broad equity market benchmark ETFs remained muted, money surged into funds tracking both broad emerging market indices and single country indices. These trends contributed towards global ETP quarterly growth of $43bn.
In addition to the strong performance of emerging market ETFs, fixed income investing continued to enjoy enormous popularity in the US, attracting inflows of $10.5bn, contributing to a global total of $12.1bn.
As the equity market stabilises, investors have moved away from sovereign benchmarked ETFs, although they are still showing a preference for domestic fixed income solutions over broad domestic equity market indices.
Although all ETP asset classes registered continued positive flows this quarter, commodity investing has seen only limited success.
The strong performance of gold in Q2 this year saw commodity investment defining ETP investment patterns.
However, as equity investing has taken off, gold flows have stalled, down to $734m in the US from $8.4bn in Q2. Europe has fared slightly better, with inflows of $987m in Q3, down from $2.8bn in the previous quarter, but this remains a much reduced pace.
Across the globe gold ETPs have exhibited a distinctly slower growth pattern even as gold prices have continued rising.
The latest growth figures come after a resurgent market performance in September. The news has prompted Deutsche Bank to reiterate their 2010 ETP market growth projection of upwards of 20% in 2010. This forecast now implies growth of at least 7% in Q4 this year, a readily achievable target.
There have been 463 new ETP product launches already this year, compared to the record of 482 launched over the whole of 2007.
With an average of 155 new products for each quarter so far in 2010, the ETP market is almost certain to reach a new high by the end of the year.
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