Global ETP assets power past $2 trillion mark

Jan 28th, 2013 | By | Category: ETF and Index News

The size of the global exchange-traded products (ETP) industry has now surpassed the milestone figure of $2 trillion, according to the ETP Research team at BlackRock, the owner of iShares.

Global exchange-traded product (ETP) assets surge through $2 trillion mark

Global ETP assets have surged through the $2 trillion mark.

The ETP market, which includes exchange-traded funds (ETFs), exchange-traded commodities (ETCs) and exchange-traded notes (ETNs), had a record-breaking year for flows in 2012, attracting $262.7 billion in assets globally and growing by 27% compared with the end of 2011.

This momentum has carried into January and the industry reached $2 trillion in assets under management on 18 January 2013.

Increased investment in ETPs is being seen in all major regions, as a broad spectrum of institutional, professional and retail investors are using the products to access asset classes in a cost-efficient and effective way, whatever the market conditions.

At an asset class level, fixed income ETPs and emerging market equity ETPs set new records for their categories in 2012, recording net inflows of $70.0 billion and $54.8 billion respectively.

Dodd Kittsley, Global Head of ETP Research for BlackRock, said: “This is an important and notable milestone for the ETP industry. Hot on the heels of an impressive 2012, the market has continued to grow in the early months of 2013, and we expect this to continue during the rest of this year.”

“The widespread adoption and evolving use by
the trading, institutional and retail community
across both passive and active types of
strategies shows the unlimited potential for
the future. We are seeing ever more
sophisticated tools, research and solutions
using entirely ETFs.”

Anthony Christodoulou, founder of WorldTrack,
a leading provider of managed ETF solutions.

The dynamics of the ETP market are changing and developing. As ETPs become better known and understood in different regions and amongst different types of investors, uptake is fast increasing. Added to this, ETP providers are expanding and deepening their coverage of different assets classes and regions, allowing investors to put ETPs to use in new ways and employ them to access areas where they couldn’t before, such as emerging market debt.

ETPs were once thought of as primarily equity-based funds for institutional investors, this latest milestone proves this is certainly no longer the case.

Kittsley continued: “It took the ETP industry 19 years to surpass $1 trillion in assets under management, which it did in 2009, and only a further four years to double this. We look forward to reaching and surpassing the next milestone, as more investors come to experience the variety of ways they can use ETPs to invest in the markets.”

Anthony Christodoulou, founder of WorldTrack, a leading provider of managed ETF solutions based in London, said: “What makes the landmark so impressive is the time period in which it was achieved. Having set record net inflows through the financial crisis, we then saw record asset growth of $1 trillion in 2009 to $2 trillion today showing that the ETF story is a structural rather than a cyclical phenomenon.”

He added: “The widespread adoption and evolving use by the trading, institutional and retail community across both passive and active types of strategies shows the unlimited potential for the future. We are seeing ever more sophisticated tools, research and solutions using entirely ETFs.”

Hector McNeil, co-CEO of Boost ETP, a newly launched ETP provider based in London, said: “The $2 trillion mark is a huge landmark for the ETP industry. It is a huge vote of confidence for a sector that is becoming the gold standard of asset management and sets the standards in low pricing, immediate liquidity, product robustness and broad product scope.”

He added: “The major engine of growth is the US but Europe is still seeing a very similar trend. This trend should continue as Europe sees further adoption of ETPs and penetration into the retail market. The ETP market is still a fraction of the global mutual funds industry, however flows from the mutual funds market will continue into ETPs, with RDR assisting these net flows.”

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