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Exchange-traded product market to grow 20 per cent in 2010


The US and European exchange-traded product market is expected to grow by 20 per cent in 2010, crossing the USD1.2trn assets under management mark, according to a report by Deutsche Bank.

Europe assets will approach the EUR2,000bn mark and experience growth between 20-25 per cent.

The US will surpass the USD900bn mark and experience growth of between 15 and 20 per cent.

If bullish equity markets continue, AUM could comfortably get closer to USD1,000bn in the US and EUR210bn in Europe, says Deutsche Bank.

European asset growth rates will continue to surpass the US, while the US market will remain significantly larger in terms of absolute size and growth.

Deutsche Bank expects fixed income to remain strong in the US due to new fixed income powerhouse entrants.

Alternative ETPs, such as those targeting hedge fund returns, will continue to see strong growth in Europe.

In Europe in 2009 more investors decided to swap rather than not to swap, and providers using synthetic replication experienced strong inflows. Deutsche Bank predicts synthetic replication will become the prevalent replication technique across asset classes in Europe.

US and European ETP assets in 2009 experienced very strong growth of USD245.5bn (45 .1 per cent) and EUR50.1bn (46.0 per cent) respectively, a combined USD322 .5bn (46.2 per cent) over 2009, bringing total assets in the two regions just over USD1.0trn.

Fixed income assets followed sharply different trajectories in the US and Europe, with the US market experiencing 83 per cent growth versus 17 per cent in Europe.

Commodity assets moved on both sides of the Atlantic, doubling in the US to USD73.6bn and nearly tripling in Europe to EUR21.1bn.

European assets primarily targeting hedge fund like returns grew to EUR684m.

In Europe the bulk of AUM is concentrated in the top five providers which together control approximately 81.0 per cent of the region’s assets.

In 2009 Blackrock and Lyxor lost market share of 1.8 per cent and 6.4 per cent, while db x-trackers, ETF Securities and Credit Suisse all grew market share by EUR26.3bn, EUR10.9bn and EUR6.8bn respectively.

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