Société Générale-owned Lyxor Asset Management is to launch a range of physical exchange-traded funds by the end of 2012, starting with fixed income index trackers, the French firm said yesterday.

Lyxor states that this is in response to what it sees as investors’ requirements. The Lyxor business how has more than €28 billion (around $36.4 billion) of assets under management in ETFs.

The market for exchange-traded products has expanded rapidly in recent years, driven by the low costs of such products and the fact that they are convenient for building portfolios, investment professionals say. However, there have been concerns about the use of so-called "synthetic products" that make use of swaps to replicate returns.

Global assets invested in exchange-traded funds and exchange-traded products reached an “all-time high” of over $1.7 trillion at the end of August, according to ETFGI, a UK-based research and consulting firm covering the global ETF and ETP industry. In its monthly Global Industry Insights report, the firm found that year-to-date (end-August), ETF and ETP assets have increased by 15.5 per cent from $1,526 billion to $1,762 billion. ETFs and ETPs saw net inflows of $143 billion, which is $23 billion above the level of net new assets logged at the same time last year.