Domestic Fixed Income and Equity ETFs Accounted for 87 Percent of Advisors’ Net ETF Flows in 2011
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SAN FRANCISCO--(BUSINESS WIRE)--The appetite for exchange-traded funds (ETFs) among independent investment advisors continues unabated into 2012, but a new report released today by Charles Schwab suggests advisors will use them differently this year. U.S. fixed income ETFs captured 54 percent of ETF inflows in 20111, and U.S. equity ETFs saw 33 percent of flows, while funds tracking international equities and commodities - and gold in particular – lost favor.
Independent advisors held $60 billion in ETF assets at Schwab as of November 30, 2011, up five percent from the end of 2010, and ETF trade volume among advisors was up 26 percent during this same time.
“Advisors large and small see real client benefits in ETFs’ low-cost structure and flexibility, as they can make tactical adjustments to portfolios in changing markets,” said Beth Flynn, vice president of ETF platform development at Charles Schwab. “The data in our report underscore this, and the insights from our experts offer a glimpse for advisors into the ETF landscape in 2012.”
The 2012 ETF Outlook for Advisors by Charles Schwab & ETF Trends examines how registered investment advisors (RIAs) use ETFs in client portfolios and shares strategies advisors can consider for today’s uncertain market and economic environment. The report combines the data and expertise of Charles Schwab, a leading custodian of retail ETF assets, with insights from the editors of ETF Trends, a web site with daily news and commentary about trends in the ETF industry.
Key findings from the 2012 ETF Outlook include:
- Asset inflows to gold ETFs dropped by more than half; other precious metals experienced significant outflows in 2011.
- Overall flows into ETFs declined from 2010, due largely to assets leaving international funds.
- The top 10 percent of RIAs by assets under management have the bulk of their ETF assets in U.S. and international equity funds (62%); smaller firms use U.S. fixed income ETFs 50 percent more than their larger peers.
- Advisors increased their ETF assets in separately managed accounts by 30 percent in 20112.
- Intermediate-/Long-term bond ETFs captured 39 percent of advisor fixed income ETF flows; short- and ultra-short bond ETFs ranked second at 26 percent.
- Although they stayed positive, flows into ETFs tracking alternative assets declined by more than 50 percent overall; ETFs tracking commodities saw a 77 percent decline in flows.
ETF Trends editor Tom Lydon joins a team of Schwab contributors on this year’s report, including Michael Iachini, Managing Director of ETF Research for Charles Schwab Investment Advisory; Kathy Jones, Fixed Income Strategist for the Schwab Center for Financial Research; Eric Pollackov, Managing Director, ETF Capital Markets, Charles Schwab; and Stephen Cucchiaro, Chief Investment Officer of Windhaven Investment Management.
The full report will be available to advisors attending the ETF Virtual Summit on January 10, 2012 (www.etfvirtual.com), an online conference held by ETF Trends and RIA Database where Schwab ETFs™ is also a sponsor.
Charles Schwab continues to be a leader in the retail ETF market, with nearly $121 billion in assets custodied on its platform as of December 31, 2011. Schwab ETFs™, which can be bought and sold commission-free online** in Schwab accounts, had $5 billion in assets at the end of 2011. In addition to the impressive value of its 15 proprietary ETFs, Schwab offers a host of resources to help clients understand and choose ETFs that fit their investment needs, including the Schwab ETF Select List; tutorials, research and tools available via Schwab’s online ETF center; and workshops at local Schwab branches.
Commission-free online trading** of Schwab ETFs is available to individual investors at Schwab, to the nearly 7,000 independent investment advisors who use Schwab’s custodial services and through Schwab retirement accounts that permit trading of ETFs.
About ETF Trends
ETF Trends is one of the leading websites for financial advisors, retail and institutional investors and the exchange-traded fund industry at large. With a special focus on news, trends, analysis and the latest product information, ETF Trends seeks to educate both novice and experienced investors around the world about the many uses of ETFs. To learn more visit www.ETFtrends.com.
About Charles Schwab
The Charles Schwab Corporation (NYSE:SCHW) is a leading provider of financial services, with more than 300 offices and 8.5 million client brokerage accounts, 1.5 million corporate retirement plan participants, 777,000 banking accounts, and $1.67 trillion in client assets as of November 30, 2011. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Advisor Services division. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and mortgage services and products. More information is available at www.schwab.com and www.aboutschwab.com. (0112-0189)
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**Restrictions Apply: Online trades of Schwab ETFs™ are commission-free at Schwab, while trades of third-party ETFs are subject to commissions. Broker-Assisted and Automated Phone trades are subject to service charges. Minimum $1,000 deposit is required to open most Schwab brokerage accounts. Waivers may apply. See the Charles Schwab Pricing Guide for details. All ETFs are subject to management fees and expenses.
Not FDIC Insured • No Bank Guarantee • May Lose Value
Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling Schwab at 1-800-435-4000 or by visiting www.schwabetfs.com. Please read the prospectus carefully before investing.
Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Unlike mutual funds, shares of ETFs are not individually redeemable directly with the ETF.
Schwab ETFs are distributed by SEI Investments Distribution Co. (SIDCO). SIDCO is not affiliated with The Charles Schwab Corporation or any of its affiliates.
Windhaven Investment Management, Inc. ("Windhaven") is a registered investment advisor and an affiliate of Charles Schwab & Co., Inc., ("Schwab").
Charles Schwab Investment Advisory, Inc. (“CSIA”) is an affiliate of Charles Schwab & Co., Inc. (“Schwab”).
The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.
ETF Trends and Schwab are not affiliated.
© 2012 Charles Schwab & Co., Inc. Member SIPC
1 Unless otherwise mentioned, all 2011 data is through November 30, 2011.
2 This figure intentionally excludes assets in Windhaven Investment Management.