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Global ETF and ETP asset growth continued to outpace global hedge fund industry in Q4 2018

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Assets invested in ETFs and ETPs listed globally amounted to USD4.82 trillion at the end of Q4 2018, following net inflows of USD164.84 billion and market moves during the period, according to ETFGI’s Q4 2018 Global ETF and ETP industry landscape insights report, an annual paid-for research subscription service. 

During the same period, the Global Hedge Fund industry saw assets fall to USD3.11 trillion, with net outflows of USD22.5 billion during the quarter.
 
According to analysis by ETFGI, USD4.82 trillion was invested in 7,620 ETFs/ETPs listed globally at the end of 2018, representing growth in assets of -0.49 per cent over the year, impacted by sharp declines in the major indices during the last quarter. During 2018, assets invested in Hedge Funds globally fell by 3.24 per cent to USD3.11 trillion in 8,311 hedge funds, according to a report by Hedge Fund Research.
 
Comparatively, assets invested in ETFs/ETPs had increased 36.23 per cent, from USD3.55 trillion to USD4.84 trillion in 2017. Over the same period, assets invested in the Global hedge fund industry increased 6.37 per cent, from USD3.02 trillion to USD3.22 trillion.
 
The HFRI Fund weighted composite index returned -5.76 per cent in Q4 compared to -13.52 per cent of the S&P 500 index (w/dividends), as many Hedge Funds strategies positioned for a market correction finally came to fruition. Despite this, investors still ploughed money into passive funds, with ETFs/ETPs attracting USD164.84 billion in Q4, while withdrawing USD22.5 billion from Hedge Funds.
 
Assets invested in the global ETF/ETP industry first surpassed those invested in the hedge fund industry at the end of Q2 2015, as ETFGI had forecasted. Growth in assets in the ETF/ETP industry has outpaced growth in the hedge fund industry since the financial crisis in 2008.
 
In 2018 the return of the S&P 500 Index was marginally better than the performance of the HFRI Fund weighted Composite index: -4.39 per cent versus -4.49 per cent, respectively.
 
During 2018, ETFs/ETPs listed globally gathered USD516 billion in net inflows, according to ETFGI’s Global ETF and ETP industry insight report. December 2018 also marked the 59th consecutive month of net inflows into ETFs/ETPs. Over the same period, HFR reported net outflows of USD33.5 billion from Hedge Funds. Assets invested in the global ETF/ETP industry continue to grow, extending their lead over assets invested in the global hedge fund industry, the gap widening by 5.30 per cent, from USD1.62 trillion at the end of 2017 to USD1.71 trillion.
 
The top 20 ETFs by net new assets in 2018, collectively gathered USD206 Bn. The TOPIX Exchange Traded Fund (1306 JP) alone accounted for net inflows of USD22.29 billion over the period. 
 

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