BlackRock, Inc. (NYSE: BLK) today announced that Global Exchange Traded Funds (ETFs)1 assets hit an all time high of $1 trillion (US$1,032 Bn) at the end of December 2009 – 45.2% above US$710.9 Bn at the end of 2008, according to the latest figures from BlackRock published today in its ETF Landscape Year End 2009 preview report. The global ETF industry had 1,939 ETFs with 3,775 listings, and assets of US$1,032 Bn from 109 providers on 40 exchanges around the world at the end of December 2009. Year-To-Date (YTD) assets have risen by 45.2%, which is more than the 27.0% rise in the MSCI World Index in US dollar terms.
The challenging market conditions of 2008 caused a significant shift in investors’ risk appetite in their evaluation of counterparty risk and their desire for liquidity. During 2009 many investors found that ETFs met their desire for greater transparency in relation to the issues of cost, transparency of holdings, transparency of price, liquidity, product structure, risk and return as they relate to investment alternatives.
ETFs are index-based2 open-ended funds that can be bought and sold as quickly and easily as ordinary shares on a stock exchange – they have become popular and widely used investment vehicles to achieve many investment strategies:- to gain diversified exposure to a market
- for core/satellite investing
- for buy and hold investing
- for active traders who wish to take advantage of market movements
- for investors wishing to hedge the market
- as an alternative to futures and other institutional investment tools.
All financial investments involve an element of risk. Therefore, the value of an investment in ETFs and the income from it will vary and the initial investment amount cannot be guaranteed.
In a world where investment products come and go with the blink of an eye, ETFs might be considered one of the most innovative financial products in the last two decades. They have fundamentally changed how both institutional and retail investors construct their investment portfolios.
ETF providers have continued to expand their product ranges in more specialised areas to cater for the growing number of professional and retail investors using ETFs as advanced portfolio construction tools. The increasing availability of these highly-specialised ETFs across the full spectrum of equities, fixed income and alternative investments now ensures that investors can use ETFs to instantly reallocate capital to take advantage of new investment opportunities.
Over the past decade the compound annual growth rate for ETF assets globally was 56.3%, it was 58.1% in the United States, 53.1% in Canada and 90.5% in Europe, and there are no signs that investor interest in ETFs is fading. Investors are finding that ETFs are products that work well in every market environment,” said Deborah Fuhr, Global Head of ETF Research & Implementation Strategy at BlackRock.
Capital flows this year within ETFs also demonstrate how these innovative investment products have become important bellwethers to gauge shifts in investor sentiment between asset classes. During the year, fixed income, equity and commodity-based ETFs enjoyed heavy inflows as some investors adjusted their risk profiles. In the beginning of the year given rising levels of risk aversion, ETFs tracking equity markets perceived as higher risk suffered much of the capital outflow, notably Asian and global (excluding US) equities.
After the markets turned in March, and kept rising through year-end, investments moved back into areas that had been shunned for the preceding year and a half. The changes in investor sentiment are shown in the net new asset data into ETFs tracking corporate bond, inflation, aggregate indices, international and emerging market indices and commodities.
Global ETF assets by type of exposure, as at end December 2009
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Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg
Top 5 ETF providers around the world ranked by AUM, as at end December 2009
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Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg
Global ETF asset growth, as at end December 2009
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Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg
Europe
European listed ETF assets hit an all time high of US$223.5 Bn at the end of December – a 56.8% increase from US$142.58 Bn at the end of 2008. The European ETF industry had 821 ETFs with 2,359 listings and assets of US$223 Bn, from 32 providers on 18 exchanges at the end of December 2009. YTD assets have risen by 56.8% which is more than the 30.6% rise in the MSCI Europe Index in US dollar terms. Top 5 ETF providers in Europe ranked by AUM, as at end December 2009![]() |
Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg
European ETF asset growth, as at end December 2009
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Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg
US
Assets for the ETF industry in the United States hit an all time high of US$705.5 Bn at the end of 2009 – a 41.9% increase from US$497.1 Bn at the end of 2008. The US ETF industry had 772 ETFs, with assets of US$705.5 Bn, from 28 providers on two exchanges at the end of December 2009. YTD assets have risen by 41.9% which is more than the 24.2% rise in the MSCI US Index in US dollar terms.
Top 5 ETF providers in the US ranked by AUM, as at end December 2009![]() |
Source: ETF Research and Implementation Strategy Team, BlackRock, Bloomberg
US ETF asset growth, as at end December 2009
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Source: ETF Research and Implementation Strategy Team, BlackRock, Bloomberg
1ETFs are open-end index funds that provide daily portfolio transparency, are listed and traded on exchanges like stocks on a secondary basis as well as utilising a unique creation and redemption process for primary transactions. ETPs are products that have similarities to ETFs in the way they trade and settle but they do not use a mutual fund structure. The use of other structures including grantor trusts, partnerships, notes and commodity pools by ETPs can create different tax and regulatory implications for investors when compared to ETFs which are funds.
2Most are index-based, but some are active