The Global View On ETFs

February 08, 2008

Morgan Stanley releases its 2007 Global Industry Review for ETFs.

Morgan Stanley's Institutional Equity group released its global industry review of the exchange-traded funds (ETFs) marketplace for 2007 on January 31. And the report, written by Deborah Fuhr and Shane Kelly, contains some fascinating data.

Global assets currently stand at $796.60 billion, a nearly 41% increase over last year, while the total number of ETFs globally grew to 1,171 primary listings (a total of 1,909 listings in all), a 64% increase from 2006. Assets in commodities ETFs increased about 87% to $6.32 billion, while assets in fixed-income ETFs grew roughly 68% to $59.93 billion. Equities ETFs saw assets increase almost 39% to $730.28 billion. Assets in exchange-traded products, meaning products that do not qualify as funds but trade in a way similar to ETFs, such as exchange-traded notes, were up 63% to $45.87 billion. During 2007, 457 ETFs were launched globally, and another 547 are planned.

The U.S. is, of course, the largest ETF market, with 601 ETFs and a total of $580.71 billion in assets under management—that's 73% of global ETF assets. Europe is in second place with $128.36 billion in assets under management, or about 16% of total global assets. The AUM (assets under management) for the U.S. and Europe grew at about the same rate, however, in 2007: Each saw assets increase roughly 43%.

Europe, however, has far more listings: Although only 423 are primary listings, it has 1,041 listings in total, the bulk of which are trading in Germany (286), France (171), Italy (169), the United Kingdom (167) and Switzerland (139). Germany has the most assets of any country in Europe, with $50.45 billion, or nearly 40% of total AUM for Europe and an increase from 2006 of almost 59%. France follows with $39.72 billion in AUM, while the United Kingdom has $23.09 billion. Despite Italy's large number of listings, only six were primary listings at the end of 2007, so the country only has about $1.24 billion in AUM.

The United States has almost 400 ETFs still in registration, while Europe has another 90 planned.

Outside of the U.S. and Europe, Japan has the biggest ETF market, with $34.20 billion, which is actually a small decrease from the prior year. The country only saw the addition of two new listings in 2007, and has a total of 16 listings, 15 of them primary.

Canada has 47 listed ETFs, 46 of them primary, and about half the assets of Japan at $17.78 million—however, that amount is still an increase of nearly 50% from the prior year. Twenty of those funds were added in 2007, and another 16 are planned.

Beyond those dominant markets, there are several interesting nuggets of information that can be gleaned from the report regarding ETFs outside the U.S. For example, although Mexico has only five primary listings and a little over $4 billion in assets, it has a total of 189 ETFs trading on its exchange. And India has eight listed ETFs, with 14 more planned. The country's total ETF AUM is $1.94 billion.

It looks as if the bulk of growth in ETFs will continue to come from the established markets in 2008, but smaller markets will also be adding listings. If you look past the U.S. and Europe, the global ETF market appears to be just getting started.


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