ETF assets near pre-crisis peak
Assets under management in exchange-traded funds are near their historic peak, reflecting continued inflows despite the funds' dramatic fall in line with global markets late last year. The figure stands in stark contrast to the traditional asset management industry, which is still struggling to increase its profitability after assets plummeted last year.
The global ETF industry now holds $789bn (€569bn) in assets under management, according to the latest monthly report on the sector from Barclays Global Investors. The historic peak in assets was in mid-2008. At the end of April last year, assets hit $805bn.
The booming industry has seen assets grow at a faster pace than the markets, thanks to substantial investor inflows. Equities ETFs have grown from $596bn to $639bn over the period, a 7% rise, while the MSCI World index rose by 4.8%. Fixed income ETF assets have grown by a third since the beginning of the year, from $104bn to $133bn.
As a result of continuing inflows, assets in the ETF industry as a whole grew 11% over the half year.
The news comes as traditional asset managers continue to struggle after last year's market falls and subsequent investor withdrawals. Equities markets have picked up since March, but assets under management remain depressed compared with last year's highs.
Financial Research Corporation, a fund research firm based in Boston, estimated that the 25 largest mutual fund firms in the US managed $6.1 trillion in mutual funds at the end of May, compared with $8.3 trillion 12 months previously. The UK's Investment Management Association reported that total assets in UK open-ended funds stood at £391bn (€452bn) at the end of May, compared with £454bn a year previously.
ETFs are popular thanks to their simplicity and low fees relative to actively managed funds. An ETF invests in a publicly disclosed basket of stocks, usually an index such as the S&P 500, and is traded on an exchange like a share. Some vehicles use derivatives to provide the same return as the underlying assets to which they are nominally linked, but the actual assets invested in the ETF might be invested elsewhere.
See Financial News on Monday for a more on the exchange-traded funds industry, and why it is under pressure from retail investors.
-- Write to Phil Craig at pcraig@efinancialnews.com
del.icio.us
Digg
Newsvine
reddit
StumbleUpon