Investors poured over $2.6 billion of net new assets into European Exchange Traded Products (ETPs) in June 2012, raising the total for the six months to the end of the second quarter (Q2) to $8.3 billion, according to Source, a London-based ETP provider.
Volatility ETPs continue to attract investor assets, adding over $900 million in new assets in the first half (H1) of 2012. Innovation in delivering volatility exposure now offers investors more efficient medium-term investment opportunities, says Source.
Source is the market leader in European volatility-linked ETFs, with three new products in Q1 and assets of over $850 million, a market share of over 85%.
Among its volatility-linked products are the Nomura Voltage Mid-Term Source ETF (VOLT) with $259 million in assets and the JP Morgan Macro Hedge US TR Source ETF (MHUU) with $232 million. [See Source expands Nomura Voltage range with launch of short-term volatility ETF and JP Morgan, Source roll out London-listed European-tilted volatility strategy ETF]
Overall, Source captured net new assets of over $171 million in June, bringing the year-to-date (YTD) total to $1.85 billion in H1. According to both ETF Global Insight and Deutsche Bank Research, at the end of Q2, Source was ranked 2nd in Europe for the second quarter running in terms of net new assets year to date.
According to Source, investors are potentially starting to re-position for a “risk on” environment by adding beta to their portfolios. The ETP provider has realised large flows into broad equity index ETFs tracking the S&P500, MSCI Europe, MSCI Emerging Markets, as well as the MAN GLG Europe Plus Source ETF (MPFE); these ETFs alone added more than $717 million in net new assets in H1.
Source also noted increased demand for its Pimco Source Short-Term High Yield Corporate Bond ETF (STHY), adding a further $49 million in Q2. Since its launch on 19 March, STHY has already attracted $133 million in net new assets. This physically-invested ETF is the first in Europe to provide access to the global short-maturity high-yield sector, an area which has historically provided a defensive alternative to equities while producing similar returns with reduced volatility. [See Pimco, Source launch short-term high-yield corporate bond ETF]
Finally, although the first half continued to be challenging for the performance of commodity assets, investors continued to increase their exposure to gold and broad commodity markets. The Source Physical Gold P-ETC (SGLD) saw $154 million of inflows and the LGIM Commodity Composite Source ETF (LGCU), which was launched in early Q1, captured in excess of $103 million of new client money. [See Legal & General teams up with Source to launch commodity ETF]