Global assets under management in exchange traded funds and exchange traded products should grow 20% to 30% annually over the next three years, BlackRock projects. The industry offered 3,503 products with 7,311 listings and assets of $1.482 trillion, from 168 providers on 50 exchanges around the world as of Dec. 31. This compares to 2,672 products with 4,856 listings and $1.156 trillion of assets from 132 providers on 45 exchanges at the end of 2009. “The industry grew across the board during 2010 and we expect this to continue in 2011,” said Deborah Fuhr, Global Head of ETF Research and Implementation Strategy at BlackRock. ETFs are index based open-ended funds that can be bought and sold like ordinary shares on a stock exchange. They can be used both by active traders and buy-and hold investors maintaining an asset allocation. Assets under management in ETFs alone will reach $2 trillion globally by the end of 2012, $1 trillion in the US in 2011 and $500 billion in Europe in 2013, Fuhr projects. Along with helpful regulatory changes, ETFs are benefiting from more fund platforms and exchanges, more marketing by online brokers, and more interest among fee-based planners.
The challenging market conditions of 2008 and 2009 caused a significant shift in investors’ risk appetite and their desire for liquidity. During 2010, many investors found that ETFs met their need for greater transparency regarding cost, holdings, price, liquidity, product structure, and risk and return related to investment alternatives, Ms. Fuhr noted. Capital flows in 2010 within ETFs demonstrated that they were showing shifts in sentiments early. “During 2010, developed and emerging equity ETFs enjoyed heavy inflows,” Fuhr said. “On the other hand, fixed income and commodity ETFs/ETPs received smaller net new asset flows than in 2009 as some investors adjusted their risk profiles.”
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