Data from TrackInsight shows the global ETF market finished 2020 at a record high of USD7.6 trillion, across 6,518 ETFs. A combination of strong equity market performance coupled with accelerating investor inflows contributed to the new record, the firm says.
Despite challenges created by COVID and market volatility, all regions experienced double-digit growth rates over 2020. Asia-Pacific was the fastest growing region with ETF assets rising by 28.7 per cent to a new high of USD689 billion, of which USD69 billion was new flow. Assets European listed ETFs grew by 26.4 per cent reaching a new record of USD1.3 trillion with USD138 billion of new flow and the North American market grew 24.1 per cent reaching an all-time high of USD5.6 trillion in assets with USD536 billion of new flows.
Against this impressive backdrop, two areas of the ETF market stood out for trend-busting growth trajectories: Active and ESG, TrackInsight writes.
USD80 billion of new flows contributed to Active ETFs growing by 55 per cent reaching a new high of USD273.5 billion in AuM. With nearly 200 new Active ETFs brought to market in 2020, there are now over 1,052 listed on exchanges worldwide.
ESG ETFs reached a tipping point in 2020 witnessing an incredible 223 per cent growth over the year, achieving a new record of USD189 billion in AuM. ESG ETFs captured USD97 billion of flows over the course of 2020 and nearly 200 ESG ETFs were brought to market during the same period as ESG is set to become a key battleground for issuers over 2021.
ESG and Thematic ETFs also dominated in terms of overall performance with five of the top 10 best performing ETFs globally (excluding ETCs and Leveraged Funds) following an ESG approach and three of the top 10 following an active strategy. All delivered triple-digit returns to investors over 2020.
Anaelle Ubaldino (pictured), Head of ETF Research and Investment Advisory at TrackInsight says: “ETFs faced an acid test in 2020 and passed with flying colours. The tremendous growth we have witnessed demonstrates how ETFs have successfully convinced investors of the benefits of a liquid, tradable and transparent product – especially during volatile markets. It’s also clear that 2020 was a long-awaited turning point for ESG ETFs with huge growth in this sector. As competition for potentially trillions of dollars of new ESG assets heating up, we expect to see more issuers enter the ESG ETF market over 2021.”