European Investors Fleeing to ETFs

Investors in the UK and Europe are moving money out of hedge funds and traditional long only funds and into exchange traded funds.

In the article Evidence emerges of investor flight to ETFs, Financial Times reporter Ruth Sullivan notes that Barclays iShares attracted $25 billion of new assets in Europe in 2008, up more than 200% from 2007.

In 2008, investors favored equity ETFs over fixed income last year, choosing benchmark strategies at lower costs than managed funds. Popular choices included the broad-based blue-chip indices such as the S&P 500 (SPY), FTSE 100 and Dow Jones Euro Stoxx 50 (FEZ).

2009 is seeing more flows into fixed income rather than equities as investors head to short-term government bonds and corporate bond funds.

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