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ETF assets overtake hedge fund assets

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ETFGI reports that the second quarter has seen assets invested in the global ETF/ETP industry finally beat the assets under management in the hedge fund industry.

Deborah Fuhr says: “According to our analysis there was USD2.971 trillion invested in the 5,823 ETFs/ETPs listed globally at the end of Q2 2015.”

Assets had dropped slightly from their record high of USD3.015 trillion at the end of May 2015, Fuhr writes. HFR reports that assets in the global hedge fund industry reached a new record high of USD2.969 trillion invested in 8,497 hedge funds over the same period, some USD2 billion smaller than the assets in the global ETF/ETP industry.  
 
“This is a significant achievement for the global ETF/ETP industry, which just celebrated its 25th  anniversary on March 9th, while the hedge fund industry has existed for 66 years” Fuhr writes.

In terms of performance, the first quarter of 2015, saw the performance of the HFRI Fund Weighted Composite Index up 2.3 per cent, against the 1 per cent return of the S&P 500 Index. Fuhr writes: “Many investors have been disappointed with the performance of hedge funds over the past few years as the HFRI Fund Weighted Composite Index has delivered returns significantly below the returns of the S&P 500 Index, according to S&P Dow Jones.”

“With the positive performance of equity markets, many investors have been happy with index returns and fees. This situation has benefited ETFs/ETPs, which offer an enormous toolbox of index exposures to various markets and asset classes, including hedge fund indices and some active and smart beta exposures” Fuhr writes.
 
ETFGI reports that net inflows into ETFs/ETPs have been significantly higher than net inflows into hedge funds over the past few years. In the first half of 2015, net inflows into hedge funds globally were USD39.7 billion, while net inflows into ETFs/ETPs globally were USD152.3 billion over the same period

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