Refinitiv Lipper has published a first half 2023 review of the global ETF industry, written by Detlef Glow, head of Lipper EMEA Research at the firm.
He writes that it was not surprising to see that the global ETF industry enjoyed overall inflows over the course of the first half of 2023.
“Nevertheless, these inflows occurred in an unstable market environment in which some asset classes showed positive results, while others performed negatively. The market sentiment was driven by hopes that central banks-especially the US Federal Reserve-may have reached the last phase of their fight against high inflation rates and may, therefore, start to keep interest rates at least stable quite soon. Some investors already expect that there might be room for decreasing interest rates later this year, but these expectations might be too positive given the hawkish statements from the Fed and other central banks such as the European Central Bank (ECB).
“In addition, there are still concerns about the war in Ukraine and other geopolitical tensions. Investors are also concerned about the normalization of the disrupted delivery chains. Even as China seems to be back on track after reopening of the economy, there are still some frictions in the system.
“Additionally, market participants are still concerned about a possible recession in the US and other major economies around the globe. These fears are raised by long-term (12 month+) inverted yield curves which are seen as an early indicator for an upcoming recession.”
Glow writes that within this market environment, the promoters of ETFs enjoyed overall inflows (+USD334.4 billion) around the globe.
According to LSEG Lipper, assets under management in the global ETF industry stood at USD10,212.4 billion at the end of June 2023. The majority of these assets (USD7,908.0 billion) was held in equity ETFs. This category was followed by bond ETFs (USD1,945.9 billion), commodities ETFs (USD178.4 billion) alternatives ETFs (USD78.1 billion), money market ETFs (USD59.2 billion), mixed-assets ETFs (USD38.4 billion), “other” ETFs (USD8.2 billion), and real estate ETFs (USD0.01 billion).
LSEG Lipper’s geographical breakdown of assets in global ETFs finds that ETFs domiciled in North America (USD7,617.2 billion) held the highest assets under management in the global ETF industry at the end of June 2023. They were followed by ETFs domiciled in Europe (USD1,538.7 billion), ETFs domiciled in the Asia Pacific region (USD1,032.0 billion), ETFs domiciled in Middle and South America (USD17.2 billion), and ETFs domiciled in Africa (USD7.4 billion).
In more detail, the report finds that the US was the largest single country ETF domicile ((USD7334.0 billion) at the end of June 2023, followed by Ireland (USD1,058.9 billion), Japan (USD505.2 billion), Luxembourg (USD323.4 billion), and Canada (USD283.3 billion). These five ETF domiciles account for assets under management of USD9,504.6 billion, or 93.03 per cent, of the overall assets under management in the global ETF industry.
Detflef Glow took part in the first outing of the ETF Express popular podcast, Off the Record. Listen now.