ETF Industry Assets Grow in Q1 2016, New Flows Suffer Declines

ETF growth across the industry in Q1 was fueled by the retail space, climbing to $2.3 trillion overall.

Broadridge Financial Solutions, Inc. (NYSE:BR), a provider of investor communications and technology solutions, has released data for exchange-traded funds (ETF) in Q1 2016 having secured a healthy uptick in assets, according to a Broadridge statement.

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More specifically, during Q1 2016, ETF assets climbed by 2.4% QoQ to $2.3 trillion, which was fueled in part by retail channels, as calculated by its Fund Distribution Intelligence. However, this performance was mitigated by an overall net decline of new assets (-0.68%), which corresponded to a decrease of $15.0 billion.

In terms of the retail space, ETFs in this realm also saw increases in assets, namely across fixed income, alternative and commodity products, though equity, convertibles and allocation product assets were all down QoQ. Furthermore, retail channels also suffered from decreased assets in every major investment categories during Q1 2016, with the notable exception of commodities, buoyed by the volatile price of precious metals, namely gold and silver.

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The picture was largely similar across net new flows for mutual funds, with total assets edging higher by 1.0% to $7.3 trillion during Q1 2016, despite seeing a loss of new assets of $11.0 billion.

Broadridge Financial utilizes a Fund Distribution Intelligence (FDI) tool – the utility helps aggregate a variety of information into a unified sales and asset data collection, tracking the performance of both mutual funds and ETF assets. The FDI tool collects data on a monthly basis, which is then analyzed by respective channel, geography, etc.

New ETF Flows Mixed

Gains were also realized amongst individual investors, having notched a growth in their respective holding – this was reflective of a $3.7 billion net new ETF assets coming from the discount brokerage channel. By extension, the wirehouse channel was the only retail channel to incur negative net new ETF flows during Q1 2016, decreasing $13 billion during the quarter.

According to Frank Polefrone, Senior Vice President (SVP) of Broadridge’s Access Data product suite in a recent statement on the metrics: “The trends we’ve been following for the past several quarters have continued – including the increased use of ETFs and passive investment products across retail distribution, as well as the growth of assets managed by independent advisors.”

“Our analysis indicates the volatility in the markets during the first quarter of 2016 resulted in increased velocity of money being reallocated within client portfolios,” he added.

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