ETF assets golden in first half of '09

Investors bought more exchange traded funds in the first half of this year than in the comparable time period in 2008, according to Strategic Insight Mutual Fund Research and Consulting LLC. But whether ETF sales will outpace last year’s record total of $176 billion in net inflows remains to be seen. “In a year when there has not been much growth in equity funds, to see such growth in ETFs is pretty good,” said Loren Fox, senior research analyst at New York-based Strategic Insight. “But it’s very hard to predict flows over the next six months. There is still so much uncertainty. The economic recovery hasn’t begun yet.” In the first six months of 2009, ETFs had net inflows of $35 billion, compared with $26 billion in the first half of 2008, Strategic Insight reported. Of the many categories of ETFs, gold led the way with $13 billion in net inflows, followed by natural resources ETFs with $9 billion, government-bond ETFs with $9 billion and corporate-bond ETFs with $7 billion, year to date through June 30. The popularity of gold ETFs could be linked to investors trying to hedge inflation or the economic uncertainty, Mr. Fox said. If year-end sales do not meet the 2008 total, it will not be surprising, as ETF sales have had two record years. “You could expect a little slowdown or pullback,” Mr. Fox said. In 2007, ETFs had net inflows of $150 billion, up from $69 billion in 2006, the firm reported. ETFs had total assets of $597 billion as of June 30. “We think ETF assets will reach $1 trillion before 2012,” said Mr. Fox.