Global ETF Assets Top $3 Trillion

April 12, 2016

Assets in global exchange-traded funds topped $3 trillion at the end of the first quarter for the second time after first doing so in May 2015.

According to London-based ETFGI, the global ETF industry, which also includes exchange-traded notes, counted 6,240 ETFs/ETNs with assets of $3.07 trillion, from 277 providers listed on 64 exchanges in 51 countries.

Different Drivers In US

“We've seen strong growth across the board globally, but for different reasons. In the U.S., we see flows coming from all three core markets: institutional, advisory and retail,” said Dave Nadig, director of exchange-traded funds at FactSet Research Systems.

“Outside the U.S., institutions are still responsible for the lion’s share of new flows, anecdotally. The recent turnaround in investor sentiment in March—a decidedly risk-on move—has driven money into all the major risk assets: corporate bonds, equities and commodities,” he added.

Despite the fact that market performance across the globe—which is also a factor in ETF asset growth—has been down for the last 12 months, the aggregate total grew throughout the year as more and more investors gravitated to these investment vehicles.

Silver Lining In Down Markets

Nadig says poor market performance can also be a driver of new money into the space.

“Historically, we've actually seen down markets and volatility as good for ETF growth,” he noted. "In choppy markets, people realize they're often overpaying for actively managed funds. So when they rotate back in, they see the value in low-cost index products like ETFs. We saw a similar pattern in 2008."

In the U.S., assets stood at $2.182 trillion at the end of the first quarter of this year, compared with $2.097 trillion at the end of the first quarter in 2015, according to FactSet data. March was the strongest month of the year so far, with $36 billion of inflows.

The first week in April kept pace with March. More than $7.4 billion in new assets flowed into ETFs, with $6.4 billion going to U.S. equity funds as the risk-on sentiment carried over to the month, according to FactSet data.

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