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An extraordinary year of growth in ETF assets and ETF diversity

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It has been an extraordinary year for ETFs worldwide, with assets increasing to the USD10 trillion mark and a huge range of exciting and innovative launches, as thematic ETFs dominated the play list.

It has been an extraordinary year for ETFs worldwide, with assets increasing to the USD10 trillion mark and a huge range of exciting and innovative launches, as thematic ETFs dominated the play list.

Our interviewees for the ETF Express Global Outlook 2022, published in association with The London Stock Exchange, are all drawn from the buy-side, investors in ETFs representing billions of dollars in the sector, hailing from the US and Europe.

The key themes of ESG and cryptocurrencies have dominated this year and our investor group tells us that they aren’t going away any time soon. Henry Timmons, director of ETFs at Richard Bernstein Advisors LLC in the US, describes the recent denial of a spot crypto ETF by the SEC as ‘confounding’, while Mary Hagerman, portfolio manager and investment adviser with Raymond James Ltd in Montreal, Canada, predicts more ETFs created in the crypto-space, linked to the actual coin or the block-chain technology behind it, and also adds: “In the search for yield, I think we will see a lot more hybrid fixed income products that are managed investments in an ETF wrapper.  This could possibly include ETFs with a fixed distribution policy, use of derivatives and more.”

In the UK, Ben Seager Scott, Head of Multi Asset Funds, Tilney Group Ltd is not such a fan of the cryptocurrency products. When asked if crypto will continue to grow within the ETP format, he says: “Sadly, probably so, driven by continued heavy demand, especially from retail. Now, I’m all for offering investors choices and a range of tools to use, but this remains an area where I think many investors may be drawn in by hype rather than fully understanding cryptocurrencies and may not realise some of the mechanisms underlying these formats.”

Over in Germany, where crypto products are allowed, Jacob Hetzel, Head of Distribution, Scalable Capital says: “We see ETPs as an essential part of the future of crypto investing. The reason for this is that many people want to participate in the price trend of crypto assets, but do not have the opportunity or the knowledge to trade in crypto values. This is fundamentally simplified by holding a crypto ETP right alongside other ETFs in the portfolio, so that more people have access to these kinds of digital assets, while this asset class is secure, easy to trade and to integrate into the portfolio context.”

Read the ETF Express Global Outlook report for 2022 to find the strong and diverse opinions of the investors in this vibrant industry.

Beverly Chandler, managing editor, ETF Express
 

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