Meteoric ETF growth suddenly halts
The meteoric rise in exchange-traded funds has slowed to a halt in the last three months, as assets under management globally fell over the last three months by 2.4%, according to new research.
At the beginning of the year, investors held $797bn (€540.8bn) in exchange-traded funds, which increased to $805bn by the end of April. However, over the following three months to the end of July, assets under management in ETFs fell to $786bn, a fall of 2.4% in three months.
The sudden fall follows growth of 41% in total assets in 2007, and 37% growth the previous year. The fall means that to match previous annual growth, ETF assets will have to grow by over 40% in less than six months.
The latest figures come from research published by Debbie Fuhr and Shane Kelly, former members of Morgan Stanley's exchange traded funds team, which was disbanded earlier this year.
The global fall was concentrated in equity ETFs, which reduced in size by $30bn to $688bn, a 4.2% fall in the three month period. The fall in equity assets coincided with a difficult time for global equity markets, as the MSCI World index fell by 9.5% over the same timeframe.
Marc Knowles, head of product management at iShares Europe, said: "Between May and July, the equity markets around the world have experienced negative movements. As the ETF industry worldwide has more exposure to equities than any other asset class, this negative decline in assets under management primarily reflects market movement."
He added that the financial year is cyclical, and expects assets to pick up significantly after the summer.
The fall in equity assets under management was partially offset by an increase in fixed income ETF assets, which rose by $9bn to $88bn.
There was also a clear regional divide, as assets in the US fell over the three-month period, while assets in European ETFs increased. According to a report by State Street Global Advisors published last week, the assets in US exchange-traded funds fell by $17bn over the three months to $578bn, while statistics from Fuhr and Kelly showed that European assets grew by $6bn to $160bn.
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