Net inflows in the first quarter are historically slow, but Deborah Fuhr, global head of ETF research at BlackRock, says global social and political unrest have made ETF investment more attractive.
"Global investment markets have been shaken by a range of extraordinary events – from social and political unrest throughout the Middle East and northern Africa, to unpredictable weather and the still unresolved nuclear event in Japan following a catastrophic earthquake and tsunami," she said.
"ETFs offer immediate exposure to a large array of indices with the flexibility to be traded at any time. The products are cost-effective, transparent and deliver diversified market exposure – attributes that were highly valued during 2011's tumultuous first quarter."
At the end of the first quarter of this year, the global ETF industry had 2,605 products with 5,905 listings from 142 providers on 48 exchanges around the world. This compares with 2,131 products with 4,133 listings from 123 providers on 42 exchanges at the end of 2010's first quarter.
Fuhr continued: "First-quarter activity indicates investors find the ability to adjust exposures easily and quickly an appealing benefit of ETFs. Products tracking broad emerging markets and China showed net outflows at the beginning of the quarter and net inflows for March."
She says concerns about inflation were another factor driving investment in ETFs.
"Inflation worries generated considerable interest in products providing exposure to indices covering broad commodities, high dividend-paying stocks, high yield fixed income, gold and real estate," she added.
"Net inflows went into products providing exposure to energy commodities, illustrating investor interest in participating in expected price increases sparked by unrest in the Middle East and North Africa."
"Such interest is expected to moderate as regional turbulence eases and energy prices move back to a more normal level."
Performance of sector over 5-yrs
Source: Financial Express Analytics