The second quarter of 2015 will see assets invested in the global ETF/ETP industry beat the global hedge fund industry according to industry research group ETFGI.
Deborah Fuhr, ETFGI founder, says: “According to our analysis published on April 24th, assets in the global ETF/ETP industry reached a new record of USD2.926 trillion at the end of Q1 2015, while assets in the global hedge fund industry, according to a new report published by Hedge Fund Research (HFR), reached a record USD2.939 trillion. We expect assets invested in the global ETF/ETP industry will surpass assets in the global hedge fund industry during this quarter.”
Fuhr continues: “Many people will find it surprising that the global ETF/ETP industry, which just celebrated its 25th anniversary on March 9th, has been growing at a faster rate than the global hedge fund industry, which has existed for 66 years.”
According to ETFGI statistics, assets in the ETF/ETP industry have been gaining on those invested in the hedge fund industry with the difference narrowing from USD230 billion at the end of 2013 to just USD13 billion at the end of the first quarter of 2015.
Fuhr writes: “In Q1 2015 the performance of the HFRI Fund Weighted Composite Index was 2.3 per cent, which is only 1.3 per cent higher than the 1 per cent return of the S&P 500 Index. Many investors have been disappointed with the performance of hedge funds over the past few years as the HFRI Fund Weighted Composite Index has delivered returns significantly below the returns of the S&P 500 Index, according
to S&P Dow Jones.”
Fuhr believes that the positive performance of equity markets has made many investors content with index returns and fees. “This situation has benefited ETFs/ETPs, which offer an enormous tool box of index exposures to various markets and asset classes, including hedge fund indices and some active and Smart Beta exposures.”
As a result, Fuhr finds that net inflows into ETFs/ETPs have been significantly higher than net inflows into hedge funds over the past few years. “In the first quarter of 2015 net inflows into the 8,431 hedge funds globally were USD18.2 billion, while net inflows into the 5,669 ETFs/ETPs were USD96.0 billion.
