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US and European ETP assets cross USD1trn mark

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US and European combined exchange-traded product assets crossed the USD1trn mark at the end of 2009, according to a report by Deutsche Bank.

 

The report says that with the recovery seen in equity markets in both regions and with 74 per cent of ETPs housed in equity vehicles, it is no surprise that assets rose.

Assets continued to rise well over and above that of equity market growth indicating investors continuing to strongly embrace this market with USD167.1bn of net inflows. ETP assets grew 46.2 per cent in 2009, while the MSCI World grew 23.8 per cent.

Deutsche Bank also found an emergence of global ETP providers which will be in a position to provide consistent service across a variety of asset classes globally.

Strong tiering of both the US and European markets is leading to a handful of providers controlling the majority of assets.

With ETP asset profiles widening, a provider’s ability to timely and efficiently create products will play the biggest role in being able to compete, the report says.

Deutsche Bank expects continued fusing of expertise across the financial services industry to create ETP products tracking more diverse benchmarks. With all major asset classes now covered by ETPs, it expects increased product creation in non equity and fixed income products.

Equities and fixed income remained the dominant ETP asset class in terms of AUM in 2009, but investors continue to show keen interest in commodities which will further elevate the third biggest asset class assets.

Deutsche Bank expects the ETP assets in the US and Europe to cross the USD1.2trn mark in 2010 assuming flat markets, with a strong possibility of reaching USD1.4trn if bullish equity markets continue.

The growth rate of the European market will likely continue to outstrip that of the US market, though the US market will remain larger.

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