Global ETFs had one of their strongest first halves, says iShares

Inflows into exchange traded funds during the first half of 2011 have far exceeded those in 2010.

The exchange traded funds (ETF) industry experienced one of its strongest first halves in terms of flows, says iShares.

Despite turbulent market conditions in various parts of the world throughout the first half of the year, global inflows into ETFs are up 10% on last year, according to iShares.

"We [the global ETF industry] are already up 10% globally versus last year and we are only halfway through the year. That is support for that case that we are going to see 18% growth rates over the next few years. 2011 is going to be a big year for ETFs," says Jennifer Grancio, head of US distribution at iShares in San Francisco.

Growth in the US is in line with that, she adds. State Street Global Advisers reported last week that US ETFs are on course to exceed $100 billion in inflows this year.

Grancio says it could be even higher: "Traditionally the second half of the year has even stronger flows than the first half so if you look at the figures from the first half I would expect well over $100 Billion in global ETF flows."

The first six months of the year have seen inflows of more than $56 billion into US ETFs, according to State Street, far surpassing the $37.3 billion seen in the first half of 2010. Global ETFs attracted $82.6 billion of net new assets, says iShares.

"If you look at the first half of this year there has been uncertainty in the direction of the market, but the industry has had one of the strongest first halves we have ever seen in ETF flows," says Grancio. "Even through these crises, the value of ETFs has increased in investors' eyes and the ETF market has grown stronger than ever."

Even if the market stabilises she says the flows will remain strong. Cash sitting on the sidelines is likely to come back into the equity market and some of that will go into ETFs.