LONDON, July 18 (Reuters) – Global daily trading volume in exchange traded funds (ETFs), one of the fastest expanding sectors in world equity markets, jumped by 17.9 percent over the first half of 2005, Morgan Stanley said in a market review.
Worldwide ETF average daily trading rose to $14.8 …
billion from $12.5 billion between January and June, with assets under management in the funds up 8.5 percent in the same period.
ETFs, which are listed and trade like equities, track indexes of stocks, bonds or other assets without requiring the investors to buy all the index components.
The tracker funds have grown dramatically in recent years, as asset managers have increasingly moved their core holdings into ETFs and targeted market outperformance in less liquid markets such as hedge funds, private equity and property, squeezing traditional long-only active fund managers in between.
ETFs now account for around a quarter of the entire underlying trading volume in stocks on U.S. exchanges, compared with less than 1 percent in Europe.
There are 390 funds with 490 listings and assets of $336 billion, managed by 46 managers on 31 exchanges worldwide. Morgan Stanley said the European ETF market had grown fastest at 19.2 percent in the first half, compared with 7.8 percent in the United States, while Japan declined by 1.8 percent.
But in absolute terms the United States is still by far the largest market, with assets under management standing at $245.4 billion in 173 ETFs, compared with Europe at $40.50 billion in 139 ETFs and Japan with $29.7 billion in 15 ETFs.
"Investors are increasingly using ETFs to gain exposure to international benchmarks," Deborah Fuhr, Morgan Stanley’s global ETF strategist and author of the report said.
"As the job of most portfolio managers has become broader and deeper, covering all the developed and emerging markets as well as looking at sectors and countries, we have found that many are admitting that they do not have the time nor resources to try to add value in all markets and are embracing the use of ETFs to gain international market exposure," Fuhr said.
The average total expense ratio (TER) for equity ETFs in Europe now stands at 43 basis points of assets under management a year.
That is significantly below the average cost of investing of 120 basis points in equity index funds in Europe, and the average TER of 162 basis points per annum for European active equity funds, as reported by research company Fitzrovia, she added.
Barclays Global Investors (BARC.L: Quote, Profile, Research) is the largest ETF manager globally with assets of $149.7 billion, or a 44.6 percent market share, followed by State Street Global Advisors (STT.N: Quote, Profile, Research) with $79.8 billion or a market share of 23.8 percent.
Fonte: Reuters
