ETF asset flows in the U.S. have moved toward defensive asset classes like gold and investment-grade corporate bonds and away from large-cap and developed international equities, according to SSgA's 2009 ETF Mid-Year Review report.
The report says the monetary policy of governments around the world might lead to inflation, noting the potential for an “abrupt return to more defensive strategies” if the market's performance over the last three months “is a cyclical bull market and part of a larger secular bear market.”
“Asset flows into ETFs remained strong during the first half of the year, as demand for transparent, liquid, and cost-efficient investment vehicles climbed,” Anthony Rochte, senior managing director at State Street Global Advisors, said in a news release.
Inverse/leveraged products grew to $32 billion by June 2009 from $11 billion at the start of 2008.
The report concludes that ETF flows could provide a road map on investment expectations for the remainder of 2009.