ETFs gain traction on fund platforms, reveals iShares

Mar 11th, 2013 | By | Category: ETF and Index News

UK investors are increasingly purchasing exchange-traded funds (ETFs) via fund platforms, according to iShares, the world’s largest provider of ETFs. The provider, which is part of investment giant BlackRock, has revealed that assets under management invested in its products through fund platforms surged by 52% between the end of 2010 and the end of 2012.

ETFs gaining traction on fund platforms, reveals iShares

iShares has seen a surge in ETF popularity on fund platforms.

iShares’ products are available on a range of UK fund platforms including FundsNetwork, Ascentric, Elevate, Novia, Standard Life, Nucleus, Raymond James and Transact.

Fund platforms are internet-based services typically used by financial advisers to view and administer investments. The platforms, which have only comparatively recently added ETF products to their line-ups, tend to offer a range of tools which allow advisers to see and analyse a client’s overall portfolio and to choose products for them.

As well as demonstrating an uptick in ETF usage, asset flows across these platforms have also revealed a number of distinct trends in each of the four quarters of 2012, as advisers and investors navigated their way through last year’s market volatility and took advantage of perceived opportunities.

Corporate bond ETFs proved popular investments in every quarter of the year while developed market equity ETFs proved particularly popular in the second and fourth quarters.

Corporate bonds registered strong inflows in the first quarter of 2012, compared to government bonds where outflows were high. For example, the iShares Markit iBoxx £ Corporate Bond ex-Financials ETF (IXSF) was the most popular iShares ETF with inflows of over £25m, while the biggest outflow was from the iShares FTSE Gilts UK 0-5 ETF (IGLS).

In the second quarter, some trends of the previous quarter were reversed with the same two government bond ETFs showing strong inflows of £28 million, while developed market equities saw strong outflows. However, corporate bond ETFs again saw strong inflows of £17 million in the quarter, demonstrating a preference for bonds over equities.

By contrast, in the third quarter, developed market equities registered strong inflows against equally strong outflows in government bonds. Corporate bonds again showed strong inflows. Property ETFs registered strong inflows in both the first and second quarters, but outflows equaled inflows in the third quarter.

The same pattern continued in the fourth quarter with developed market equities, corporate bonds, emerging market sovereign bonds and dividend focused ETFs all registering strong inflows. UK equities brought in £22 million and another £27 million flowed into five separate euro equity ETFs. By contrast government bonds and property ETFs saw outflows of £28 million.

Pollyanna Harper, Head of Intermediary Sales UK at iShares, said: “Advisers and investors are adjusting to this new world of increased market volatility, low yields, and Retail Distribution Review enforced changes to adviser pricing. The leap in iShares platform ETF assets under management and last year’s flows suggest the retail investment market is becoming more aware of the convenience and cost effectiveness that ETFs provide and is becoming more confident in using them.”

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