22 Nov 2013

BlackRock Investment Institute

Exchange-traded products (ETPs) focused on equity market sectors are a good barometer of investor sentiment. We analyse money flows, sector compositions and the most widely held individual stocks. Below please find the highlights :

  • Sector ETPs hold US$262 billion in assets, accounting for 15% of the global equity ETP total. The segment is on fire: it has attracted a disproportionately large share (23%) of all equity ETP inflows so far this year.
  • US sector ETP assets make up 70% of the segment, with the remainder mostly in global sector funds. The ETP share of the total US sector fund market (both mutual funds and ETPs) has jumped to 36%, from 10% in 2004.
  • Financials, real estate and technology funds currently are the most popular US sector ETPs, making up almost half of total assets. These rankings can change significantly over time. US financials and healthcare funds have recorded the most inflows in the past year.
  • The relative sizes of US sector ETPs largely mimic industry benchmark weights. The big exception: an outsized US$28 billion invested in real estate funds.
  • Fluctuating flows into sector ETPs reflect variation in investor objectives and products. This clouds the relationship between flows and stock performance.

We detail the top holdings of leading US sector ETPs, as well as stock concentration by industry. Overall ETP industry inflows rebounded to US$62.1 billion in the third quarter, more than double the previous quarter. Flows whipsawed throughout the quarter, mirroring market expectations for the direction of US monetary policy.

Global ETP Flows

 

 

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