ETFs gain ground with record net inflows in May

In its monthly newsletter, the exchange-traded product analyst revealed that BlackRock’s iShares division gathered the largest net exchange-traded fund inflows in April at $9.7bn (£5.77bn), followed by Vanguard with $6.5bn (£3.86bn), and Lyxor ETFs with $1.4bn (£0.83bn).

The newsletter said: “In May, investors invested net new money in almost equal amounts into equity and fixed income exposures with net new flows going into a broad spectrum of exposures from riskier emerging market equities to safer government bond products.

“The S&P 500 ended May at an all-time high of 1924, up 5 per cent year-to-date, while the DJIA is up only 2 per cent. US stocks have advanced each month in 2014, except for January.

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“During May, developed markets gained 2 per cent and emerging markets 4 per cent, with Asia showing strong performance, up 4 per cent.”

The newsletter also showed ETFs and ETPs gathered $22.4bn (£13.32bn) in net new assets in May, bringing global assets invested in passive products to a record high of $2.55 trillion (£1.52 trillion).

Fixed income ETFs/ETPs gathered the largest net inflows at $11.5bn (£6.84bn), followed by equity ETFs/ETPs with $10.3bn (£6.12bn), while commodity ETFs/ETPs saw net outflows of $565m (£335.87m).

ETF stock echange launch for BlackRock

BlackRock has launched two ETFs listed on the London Stock Exchange: the iShares MSCI Emerging Markets Consumer Growth UCITS ETF aims to capture opportunities arising from evolving spending patterns by emerging market consumers; the iShares MSCI USA Dividend IQ UCITS ETF invests in US companies that target higher-than-average dividend yields.

Adviser view

Duncan Glassey, chartered financial planner and founding partner of Edinburgh-based Wealthflow, said: “Advisers need to know what’s going on under the bonnet of investments and I fear that too many use ETFs because they are lower cost.

“Our concern is that there is a risk that ETFs themselves are traded because they are relatively easy to get in and out of, and as a result people use them in active strategies. They should not be used that way, as they are a buy and hold product. Our worry is that this type of trading brings additional risks for investors.”