By YOUNG MONEY Staff
5 October 2012

Money flowed into exchange-traded products (ETPs) at a record rate during the first third quarters of 2012, according to data provided by independent research and consultancy firm ETFGI.

Net inflows
The net inflows into ETPs, which include exchange-traded funds (ETFs), exchange-traded commodities and exchange-traded notes, reached an all-time high of $188 during the nine-month period, according to ETF Daily News. The sum surpassed the previous record of $170 billion going into these vehicles during the first three quarters of 2011 by $18 billion.

Total assets
The total assets that these ETPs had under management rose to a new all-time high of $1.86 trillion during the period, compared to the record of $1.76 trillion that was set at the end of August 2012, the media outlet reports.

Data provided by the independent research and consultancy firm reveals that the total assets held by these ETPs worldwide have increased from $1.53 trillion since the beginning of 2012, which represents a 21.7 percent gain, according to the news source. These numbers come from 4,690 ETPs and 9,626 listings, which are offered by 204 providers and traded on 56 different exchanges.

Of the $1.86 trillion that is held in ETPs, U.S. investors account for 70.1 percent of this total, with Europe representing 18.8 percent and Asia Pacific taking up 3.9 percent. Once these areas have been accounted for, 7.2 percent remains.

Competition among providers
The market for ETPs remains staunchly competitive in the face of robust expansion, and the top three providers of these financial instruments repeatedly draw more than 60 percent of the market's assets, net new assets and trading volumes, the media outlet reports.

"ETF competition is about getting the product mix and the ETF Eco System right and not just low costs.  We will see some movement in the relative size of the industry heavyweights and while benchmark, performance, trading, liquidity and product structure will continue to be key considerations, costs as we see from the US will be an increasingly important component," stated Deborah Fuhr, managing partner at ETFGI.

The rising amount of funds flowing into ETPs comes after a 2006 survey predicted that over the next decade, the preferences of investors would change and they would mostly choose to put their assets into financial instruments providing passive investing strategies, according to The Financial Times.