Strong ETF inflows defy typical January

Exchange traded products had a fantastic year on 2010 cashing in a $115 billion across-the-board inflow, topped with a year-ending of around $1 trillion in AUM. In the same line, without a sign of slowing down, the ETP industry opened the year at full speed with 19 new product launches, strong asset inflows of $11 bn YTD, and a great outlook for its main asset class: US Equities.

Total US ETP flows for the last week registered $2.7 bn of outflows vs $2.1 bn inflows the previous week, setting the YTD weekly flows average at +$2.8 bn. US ETPs AUM keep establishing a threshold above the trillion dollar with $1.01 trillion so far.

Equity ETPs, driven by US equities reallocation, gathered $10.7 bn since the beginning of the year, coming out of the January outflow pattern we have seen since 2007. Emerging Markets ETPs flows, the big equity story of 2010, stands shamefully at a $2.4 bn outflow. While throughout 2010, Broad EM ETPs sheltered the bulk of the new assets, we have seen investors favoring country EM ETPs during 2011 instead. In addition, Fixed Income ETPs have cashed in a surprising $3.1 bn of new flows YTD (Corporates,+$2.0 bn; Sovereign, +$943 mm). Finally, Gold ETPs have experienced their largest outflow (-$2.7 bn), during the same 4-week period. Please see the weekly commentary section for more details.

New Launch Calendar: Quantity and diversity sets the tone
After a quiet year ending, new product activity jump-started with 19 new products coming to market in the first four weeks of the year. The new products listed at NYSE Arca, provide investors with new choices to access distinct return streams in the way of Alternative, Equity, Fixed Income, and Commodity ETPs.

Turnover Review
Turnover has picked up since the end of last year. Last week’s total ETP turnover was $349 bn vs $253 bn the previous week. This represented an increase of about 38% from the previous week (with 4 days only), and a 3.7% increase over last year’s weekly average. Week over week, turnover increased more substantially in Equity (+$81 bn, 37%) and Commodity (+$10 bn, 61%) ETPs.

Assets Under Management (AUM) Review
Mainly driven by a small correction in the equity markets and a flight from emerging markets equities and gold, overall assets decreased by 0.6%, from the previous week, sitting at $1.01 trillion at the end of the week. Year to date US ETPs AUM have increased $8.0 bn or 0.8%.

The U.S. ETF Market Weekly Review is a product of Deutsche Bank's Global Equity Index & ETF Research. More at www.db.com.

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