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BGI highlights “phenomenal growth” in ETF industry


At the end of 2008 there were 1,590 exchange traded funds with 2,658 listings, assets of USD711.0bn, from 85 providers on 42 exchanges around the world, according to a report from Barcl

At the end of 2008 there were 1,590 exchange traded funds with 2,658 listings, assets of USD711.0bn, from 85 providers on 42 exchanges around the world, according to a report from Barclays Global Investors.

BGI says concerns among investors about counterparty risk, transparency, liquidity and the use of derivates and structured products is making ETFs more popular.

BGI says just about the only product to see net inflows in 2008 were ETFs. 

On a global basis ETF net sales were USD214.8bn, while net sales of mutual funds (excluding ETFs) were minus USD204bn through the end of November, according to Strategic Insight.

In 2008 assets fell by 10.8 per cent, which is less than the 42.08 per cent fall in the MSCI World Index in USD terms.

The number of ETFs increased by 36 per cent in 2008, with 472 new ETFs launched. There are currently plans to launch 604 new ETFs.

In Europe, the ETF industry had 632 ETFs at the end of 2008 with 1,539 listings, assets of USD142.82bn, from 29 providers on 19 exchanges.

Assets in Europe have risen by 11.2 per cent, compared to the 47.87 per cent fall in the MSCI Europe Index in USD terms.

The US, meanwhile, had 698 ETFs at the end of 2008, with assets of USD497.12bn, from 18 providers on three exchanges.

Assets fell by 14.4 per cent, compared to a 38.58 per cent fall in the MSCI World Index.

BGI estimates that ETF assets under management in Europe will exceed USD200bn in 2009, USD1trn globally in 2009 and USD2trn globally in 2011.

It says the factors driving anticipated growth include: growth in the number of institutional and retail investors who use ETFs; regulatory changes in the US and Europe that allow funds to make a larger allocation to ETFs; and the growing number of exchanges that plan to launch new ETF trading segments.

Based on data through December 2008, the average number of ETF shares sold short during 2008 is 1,693 million shares – significantly higher than the average of 1,242 million shares during 2007 and 837 million in 2006.

In 2008 investors moved assets into ETFs providing exposure to fixed income and commodity indices while the assets in ETFs tracking equity indexes, especially global (ex US) and emerging market indices, have declined.

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