Fixed income ETFs to grow by 200 per cent

  • Story by: Anil Dawar
  • Magazine: FTAdviser
  • Published Monday , March 10, 2008

IShares, the Exchange Traded Fund (ETF) arm of Barclays Global Investors, is expecting assets in fixed income ETFs to grow by more than 200 per cent and hit the £100bn mark($200bn) over the next three years as the products become more widely traded by capital market banks.

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Globally, fixed-income ETFs have more than £30bn ($60bn) in assets under management - about 7.5 per cent of the total ETF market. The size of these assets have grown by 230 per cent from £9bn ($18bn) in June 2005 to more than £30bn ($60bn) at the end of January.

ETF assets of all classes are expected to balloon from £400bn ($800bn) currently to exceed £1 trillion ($2 trillion) by 2011.

Alex Claringbull, fixed income portfolio manager at iShares, said: "The fixed income ETF market is still in its infancy and the majority of fixed income investors still trade with the large fixed income capital market banks.

"However, as the size of the ETF market grows, banks will start bringing fixed income ETFs more to the attention of clients which will have a major effect on the growth of the market generally and fixed income ETFs specifically."

"We are likely to see more banks look to leverage the liquidity and transparency that ETFs provide to investors and consequently invest more extensively in fixed income ETF products."

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