ETF investors react to volatility in January

It’s been a shaky start to 2015 for global markets—and exchange-traded fund (ETF) investors have responded by pushing more money into fixed income and commodity products to smooth out the ride, according to new research from London-based ETFGI. All told, investors put US$13.3 billion into fixed income ETFs and a further US$5.2 billion into commodity products. That makes January the third largest month on record for fixed income and commodities.

As investors headed for safety, they also pulled US$8 billion out of equity ETFs during the same month.

As managing partner, Deborah Fuhr put it:

“Investors showed a strong preference for fixed income and commodity exposure during January as volatility increased. The S&P 500 was down 4%, developed markets were flat, emerging markets were down slightly while frontier markets where down 3% in January. The ECB [European Central Bank] announced on January 22nd a stimulus package, which will total US$1.27 trillion based on buying US$69 billion a month in public and private bonds to stimulate the European economy.”

While ETF inflows were generally strong, not all regions were the same. Europe had its largest ever monthly inflows_US$14.9 billion—while Japan also had a strong start to the year with US$3.8 billion.

However, Asia-Pacific ex Japan had its weakest start to the year with US$3.0 billion in net outflows during January.

Other points of interest from the latest ETFGI research include the following:

  • there are now 5,585 ETFs globally;
  • total ETF assets are now US$2.77 trillion;
  • there are 242 providers listed on 63 exchanges in 51 countries;
  • largest inflows in January went to Vanguard with US$9.8 billion, followed by iShares with US$7.7 billion, WisdomTree with US$3.9 billion, DB Xtrackers with US$3.3 billion and UBS GAM US$2.3 billion in net inflows; and
  • January saw 55 new products listed and 39 ETFs closed.