ETF/ETP assets could surpass those for hedge funds
Assets invested in the global exchange-traded product industry could be set to surpass those going into hedge funds around the world, research has suggested.
The three-page research note from ETFGI, a research and consultancy firm, predicted that the industry for ETPs and ETFs could surpass hedge funds in terms of assets invested during the second quarter of 2015.
Recent analysis by the firm found assets in the global ETF and ETP industry had reached US$2.926trn (£1.919trn) at the end of the first quarter.
According to Hedge Fund Research, in the same period assets invested in the global hedge fund industry reached US$2.939trn (£1.927trn).
Using information from the same two sources, the note claimed there were net inflows of US$96bn (£62.96bn) into 5,669 ETFs and ETPs in the first quarter, compared to US$18.2bn (£11.9bn) into 8,431 hedge funds.
| Global hedge funds | Global ETFs/ETPs | |
| Assets as at the end of Q1 2015 | $2.939trn (£1.927trn) | $2.926trn (£1.919trn) |
| Net inflows for Q1 2015 | $18.2bn (£11.9bn) | $96bn (£62.96bn) |
Source: ETFGI and Hedge Fund Research
The ETFGI note added: “Assets in the ETF/ETP industry have been gaining on those invested in the hedge fund industry, with the difference narrowing from US$230bn (£150.8bn) at the end of 2013 to just US$13bn (£8.52bn) at the end of Q1 2015.”
The research note claimed that in the first quarter of the year the HFRI Fund Weighted Composite Index had a performance of 2.3 per cent, compared to the 1 per cent achieved by the S&P 500 Index.
It said: “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.”
But the report noted that, in contrast, ETFs had benefited from market conditions and investor reactions to these.
It said: “With the positive performance of equity markets, many investors have been happy 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.”
Adviser view
Ian Head, director of Berkshire-based Fund Management, said: “The drive into ETFs is partly fuelled by the press banging on about price and advisers responding to that.”
