Institutional ETF usage up 92% since 2005, finds ETFGI

Sep 29th, 2013 | By | Category: ETF and Index News

Analysis from ETFGI, a London-based research and consulting firm focused on the exchange-traded funds (ETF) and exchange-traded products (ETP) industry, has found that some 3,367 institutional investors across 50 countries reported holdings in ETFs and/or ETPs in 2012.

Institutional ETF usage up 92% since 2005, finds ETFGI

Deborah Fuhr, managing partner and co-founder of ETFGI.

The analysis looked at the number and types of ETFs and ETPs being used by institutional investors globally from 2005 through 2012 and was based on reports filed to US regulators and held on the Thomson Reuters/Lipper share ownership database.

According to the analysis, reported use of ETFs and ETPs by institutional investors has grown at a compound annual growth rate of 6.9% over the past five years through 2012.

Deborah Fuhr, Managing Partner at ETFGI, said: “We have seen a significant increase in the use of ETFs/ETPs by institutional investors. From 2005 to 2012 there was a 92% increase in the number of institutions that reported using ETFs/ETPs, going from 1,752 institutions globally in 2005 to 3,367 in 2012”

The Financial Times reported that Bank of America Merrill Lynch (BofAML) had emerged as the largest institutional user of ETFs, with holdings of more than $50 billion, while a further $166 billion of ETF assets were held by Wells Fargo, Morgan Stanley, Goldman Sachs, UBS, BMO, JP Morgan and Citi.

The considerable ETF holdings of these financial giants is largely a function of their extensive investment advisory and wealth management practices and their roles as market markets and authorised participants.

In the hedge fund space, the analysis identified John Paulson as the manager with the largest exposure to ETFs, primarily owing to his extensive holdings in SPDR Gold Shares (GLD), the world’s largest gold ETF.

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