The volumes of cash flowing into exchange-traded funds and other exchange-traded products (ETF/ETP) have hit new record levels. In the year so far to end-July a total of US$391.26bn was invested, according to ETFGI, an independent researcher and consultant.
This is more than the total of $390.42bn new net inflows recorded in the whole of 2016, says ETFGI. The inflow in July reached $43.48bn. This was the 41st month in succession that the industry has seen net inflows globally, it adds.
This takes the sums now invested in the products around the world to $4.279bn, another new record. This represents a 2.7% increase in July and a 20.6% increase in the figure for the year to end-July. At the end of July there were 6,978 ETF/ETP from 329 providers.
Deborah Fuhr, managing partner, ETFGI LLP
Equity sees biggest change
Products devoted to equity saw the biggest change. The total number of listings globally is 13,192 on 69 exchanges in 56 different countries from 329 providers.
Deborah Fuhr, who is the managing partner at ETFGI, noted that the bulk of equity markets saw further increases in July. International equities, and especially emerging markets, were up 3% and 6%, respectively.
Political risks continue to be an issue, she adds. These include the ability (or lack of ability) of US president Donald Trump to make progress on policy goals and hearings on Capitol Hill. Brexit negotiations and North Korea also feature on investors' radar.
iShares takes biggest share
iShares accounted for the most inflows in July with $18.11bn. Then came Vanguard with US$9.49bn, followed by SPDR. iShares saw the largest year to date inflows ($158.94bn), followed by Vanguard ($91.80bn and Schwab ($15.33bn).
This growth is testimony to the fact that the ETF/ETP is now the product of choice for mutual fund-style investing says Hector McNeil, a specialist in the sector since the early to mid-2000s. “The ETF is digital television, the mutual fund is analogue,” he says.
“The ETF is superior to the mutual fund in terms of cost, transparency, tradeability and accessibility. You'll get everything you want in an ETF bar property and private equity. We have only scratched the surface so far. We have a long way to go.”
Powerful trend to passive smart beta
Separately, McNeil and Nik Bienkowksi, self-styled ETF entrepreneurs, say they are aiming to disrupt the European ETF market. They are launching Europe’s first 'white label' UCITS (undertakings for collective investment in transferable securities) ETF platform.
HANetf, they say, will provide a one-stop-shop for asset managers who want to enter the European UCITS ETF market without having to establish a full services business.
McNeil says: “We want to help any companies who may have thought the road to market too costly, time-consuming or management intensive to issue ETFs under their own efforts.”