Investment in exchange-traded funds (ETFs) and exchange-traded products (ETPs) surged globally in 2012, reaching a record US$1.95 trillion of assets invested, as investors sought passive strategies while funds charging for stock-picking expertise underperformed.
Figures from research firm ETFGI reveals last year saw a 27.6% spike in capital invested in ETFs and ETPs to US$1.95 trillion from US$1.53 trillion, reflecting 10-year compounded annual growth of 29.6%.
The top three ETF and ETP providers accounted for 68.9% of global assets invested in the instruments, with the largest – iShares – accounting for US$760 billion, or 39% of market share.
In Europe however, where support for the products has always trailed that of the US, figures for ETFs and ETPs traded on NYSE Euronext suffered a gradual decline throughout the year. In December, €4.06 billion in ETFs was traded, a 28.13% decrease from December 2011’s €5.6 billion. August 2011 saw the greatest value traded in recent years, with €14.22 billion. The previous high was January 2008, which recorded €14.76 billion.
Deborah Fufr, managing partner at ETFGI, said despite wavering support for ETFs and ETPs products in Europe, global figures indicated asset managers were increasingly attracted by the flexibility the products offer.
“The uncertain and challenging market conditions investors have faced during 2012 and over the past few years, combined with the difficulty in finding active managers that consistently deliver alpha, have caused more institutional investors, financial advisors and retail investors to embrace the use of ETFs and ETPs for strategic and tactical asset allocations,” Fufr said.