BlackRock Says ETFs Passed $1T Milestone

BlackRock, Inc. said that global exchange-traded-fund (ETF) assets hit an all time high of $1 trillion at the end of 2009.
That is 45.2% above the $710.9 billion recorded at the end of 2008, according to the latest data from BlackRock’s ETF Landscape Year End 2009 report. A press release said the global ETF industry had 1,939 ETFs with 3,775 listings, and assets of $1.032 trillion from 109 providers on 40 exchanges around the world at the end of December.

BlackRock explained the growth by saying the challenging market conditions of 2008 caused a significant shift in investors’ risk appetite, in their evaluation of counterparty risk, and their desire for liquidity. According to the firm, during 2009 many investors found that ETFs met their desire for greater transparency in relation to the issues of cost, transparency of holdings, transparency of price, liquidity, product structure, risk and return as they relate to investment alternatives.

“Over the past decade the compound annual growth rate for ETF assets globally was 56.3%, it was 58.1% in the United States, 53.1% in Canada and 90.5% in Europe, and there are no signs that investor interest in ETFs is fading. Investors are finding that ETFs are products that work well in every market environment,” said Deborah Fuhr, global head of ETF Research & Implementation Strategy at BlackRock, in the announcement.

According to BlackRock’s data, during the year, fixed-income, equity, and commodity-based ETFs enjoyed heavy inflows as some investors adjusted their risk profiles. In the beginning of the year, given rising levels of risk aversion, ETFs tracking equity markets perceived as higher risk suffered much of the capital outflow, notably Asian and global (excluding U.S.) equities.

After the markets turned in March, and kept rising through year-end, investments moved back into areas that had been shunned for the preceding year and a half. The changes in investor sentiment are shown in the net new asset data into ETFs tracking corporate bond, inflation, aggregate indexes, international and emerging market indexes, and commodities.