In the first half of 2008 the Deborah Fuhr and Shane Kelly report takes note of some astounding differences in the use of European domiciled ETFs vs European
In the first half of 2008 the Deborah Fuhr and Shane Kelly report takes note of some astounding differences in the use of European domiciled ETFs vs European
domiciled mutual funds when we compare net sales data as calculated by Lipper Feri for the first half of 2008. Net sales of mutual funds domiciled in Europe xcluding ETFs were minus 63.1 billion euro in the first six months of 2008 while during that same period net sales of ETFs domiciled in Europe were a positive 21.9 billion euro.
Net sales of equity ETFs were positive 14.5 billion euro and bond ETFs were positive 3.1 billion, which compares to net sales of minus 90.1 billion euro for equity mutual funds (ex ETFs) and minus 59.6 billion for bond funds (ex ETFs).
The European ETF industry will continue to grow based on a number of factors including; 1) the increasing number of institutional and retail investors who are using ETFs for low cost Beta exposure, 2) the expansion in asset classes and the number and types of equity, fixed income,commodity and other indices covered, 3) regulatory changes under UCITS which allow investors to make larger allocations to ETFs, 4) longer holding periods by investors who use ETFs as tools for tactical and strategic exposure, 5) development and growth of investment products that employ ETFs and other low cost beta products 6) new exchanges launching new ETF trading segments and 7) the expectation that new issuers/managers will launch ETFs (12 of the top 20 asset managers globally currently manage ETFs).
There has been a proliferation of new indices from index providers, which they hope will form the basis of new ETFs. Many of the new indices use diverse weighting methodologies, including market capitalization, equal weight, price, dividend and other fundamental factors. Many index providers are also working on creating Shariah compliant indices.
ETCs/ETNs (Exchange Traded Commodities/ Exchange Traded Notes) are listed securities, not funds, which means he regulatory and tax treatment may be different than traditional ETFs. Similar to ETFs, ETCs are liquid, as they can be created and redeemed n a continuous basis by market makers and liquidity providers, matching the liquidity of the underlying market. ETCs/ETNs domiciled in Europe are another fast growing product. We combined ETFs, ETCs and ETNs into the broader grouping ETPs (Exchange Traded Products).
