Global ETF Assets Hit an All Time High

Sep 7th, 2012

Investment Executive - Megan Harman - September 7, 2012

Global assets invested in exchange-traded funds (ETFs) and exchange traded products (ETPs) hit an all-time high of over US$1.7 trillion at the end of August, according to research and consultacy firm ETFGI LLP.

The firm reported on Friday that ETF and ETP assets have increased by 15.5% to US$1,762 billion from US$1,526 billion since the beginning of 2012.  Over the past 10 years, the compound annual growth rate of these products globally has been 26.5%.

There are currently 4,713 ETFs and ETPs around the world, offered by 204 providers on 56 exchanges.

The Canadian ETF industry was comprised of 254 ETFs at the end of August, with assets of US$52 billion from seven providers.  Assets rose by 4.5% from US$50 billion the previous month, and have jumped by 23.8% from US$42 billion at the beginning of 2012.

The firm attributes the rapid growth to challenging market conditions and difficulty in finding active managers that consistently deliver alpha.  It notes that ETFs provide greater transparency in relation to costs, portfolio holdings, price, liquidity, product structure, risk and return compared to mutual funds and many other investment products.

"In a world where investment products come and go in the blink of an eye, ETFs have proved that they are here to stay and might be considered one of the most innovative financial products in the last two decades," said Deborah Fuhr, managing partner at ETFGI.  "Market volatility may be making investors wary about stock market, but they continue to find exchange-traded funds and other exchnage traded products useful tools."

Equity ETFs and ETPs have gathered the largest net inflows around the world this year, accounting for US$76 billion, followed by fixed income ETFs and ETPs, with US$47 billion.  Commodity ETFs and ETPs have captured US$10.5 billion, dominated by precious metals.

In Canada, however, fixed income has been the most popular category of ETFs and ETPs this year.  Year-to-date, fixed income products have attracted $US4.5 billion in assets, compared to US$3.1 billion in equities.

Of Canadian ETF providers, BMO Asset Management gathered the largest net inflows in August, with $454 million.  Year-to-date, iShares has attracted most inflows, with US$3.5 billion, followed by BMO Asset Management with US$3.3 billion and Horizons ETFs with US$617 million.