Net new ETP assets sink in Asia, but soar for EM

Exchange-traded products listed in Asia ex-Japan suffered a net decline of $558 million last month, in stark contrast to record inflows into emerging market ETPs so far this year.
Net new ETP assets sink in Asia, but soar for EM

Asia’s exchange-traded product (ETP) industry saw a drop in net new asset flow last month, even as emerging market ETPs recorded their best ever start to a year.

A net $588 million in assets exited ETPs – including exchange-traded funds – listed in Asia (ex-Japan) last month, compared with inflows of $809 million in January, finds Deborah Fuhr’s independent consultancy ETF Global Insight. That makes a net inflow of $221 million this year.

Yet emerging market equity ETPs attracted $14.5 billion in net new assets in the first two months of this year, according to a global industry report by BlackRock. That figure is higher than the net $9.7 billion that these products attracted through the whole of 2011.

The rise was led by a $7.9 billion inflow into EM equity ETPs in February amid a strong rebound in risk appetite, while North American equity exposure ETPs attracted $700 million last month and $14.7 billion in January, finds BlackRock.

The US asset manager – whose iShares exchange-traded funds arm formed part of its 2009 acquisition of Barclays Global Investors – also points to growing global appetite for fixed income ETPs (see chart).

In February they attracted $4.4 billion and accounted for 24% of all ETP inflows. That was dominated by investment grade and high-yield corporate bond ETPs, which have garnered $12.9 billion in net new assets since then start of this year. Government bond ETFs, meanwhile, saw $2.5 billion in outflow last month.

Global assets held in ETPs reached $1.72 trillion as at the end of February, a 12.8% increase by BlackRock numbers. Overall iShares is the largest global provider with a market share of almost 39%, followed by State Street Global Advisors (17.3%) and Vanguard (11.6%).

Meanwhile, ETF Global Insight reports that the Asia (ex-Japan) decline was led by Polaris, a Taiwanese securities investment trust enterprise, which since the start of this year has seen net asset outflow of $730 million, of which $613 million (84%) occurred last month.

Polaris was the biggest loser among Asia’s top 20 ETF providers, which together account for almost 91% of the industry’s $61.7 billion in total AUM as at the end of February, the consultancy finds.

Other net new assets (NNA) losers in the first two months include SSgA – the largest ETF player in the Asia region by value with a 21.1% market share – which saw an outflow in NNA of $313.7 million in the year to end-February. HSBC/Hang Seng also saw $216 million in NNA outflow over the same period, 86% of which came last month.

Woori Asset Management ($101 million in outflow) and Lyxor Asset Management ($61.8 million in outflow) also saw declines in both January and February.

On the other side of the equation, NNA inflows in Asia ex-Japan this year were led by iShares, the second largest player in the region with 13.4% market share, which added a net $363 million in the first two months of this year.

Korean houses Samsung Investment Trust Management and Mirae Asset MAPS Global Investments were close behind, with inflows of $342 million and $231 million, respectively.

Interestingly, the biggest NNA winners in February alone were Ping An with inflows of $110 million, Kyobo Axa Investment Management with $90 million and XIE Shares with $80 million.

Overall, the Asia-Pacific ex-Japan ETF industry had 337 ETFs with 457 listings from 81 providers on 14 exchanges at the end of February, finds ETF Global Insight. A total of 27 new ETFs were listed in the first two months.

Hong Kong’s Hang Seng has seen the largest NNA outflow among ETF index providers so far this year with -$593.5 million, closely followed by FTSE with -$583 million in outflow, although the latter was by far the worst hit in February with -$626 million in outflow. The Korea exchange saw the strongest inflow, with +$621 million in January.

As an index provider, Hong Kong’s Hang Seng has the highest share of the market by value with 22.2%, followed by the Shanghai Stock Exchange with 17.7%, FTSE with 16.9% and the Korea Exchange with 13.5%.

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