Growing divide in US investor favour

This article is part of
Passive Investing - June 2014

The latter asset class is the newest, but it is certainly a fast growing area with the range of products and strategies available continually evolving, such as the recent launch of a multi-strategy, multi-beta exchange traded fund from Amundi, it is only a matter of time before they start to overtake tracker funds in general.

The US remains the largest market in terms of ETPs, mainly as they started earlier than other markets, and this is reflected in its share of the total market at approximately 70.6 per cent, according to the BlackRock ETP Landscape report for May.

Interestingly the size of the market is not determined by the number of products available, with Europe falling into second place in terms of market share by asset size yet it has almost 600 more listed ETPs than the US.

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In terms of the exposure, however, the global ETP market has been driven primarily by flows into fixed income rather than equities, with the report highlighting longer duration US Treasuries, European government bonds, investment-grade corporate debt and broad developed market fixed income as specific beneficiaries of investor sentiment.

That said, some equity regions have seen continued strong inflows, with European equity ETPs inflows of approximately $4.6bn (£2.7bn) of inflows, including $3.6bn in broader pan-European ETPs.

This move towards Europe has no doubt benefited from the improved economic outlook in the region, and the recent announcement by the ECB on monetary stimulus measures is only likely to increase the popularity of the region.

Meanwhile figures show that there is a growing divide among investors between those that favour the US and those that don’t. According to the ETP Landscape report, emerging markets saw a second month of strong positive inflows, of roughly $2.7bn, in spite of the wider perceived negativity around the asset class and region following last year’s sell-off.

This could demonstrate a turning point in attitude if this should continue for future months, while the US equity ETPs seem to have had a reversal of fortune.

The report notes that US equity flows were down $5.1bn overall in May, although not all parts of the market were hit equally hard. Instead the greatest outflows came from the US small-cap focused ETPs, with outflows of $6.2bn, while large caps gathered $1.2bn of assets during the month, slightly beaten by energy and real estate focused ETPs that recorded inflows of $1.8bn and $1.6bn respectively.


Many investors have the perception that exchange-traded products are really only used in the UK and US, but it is more a global business than ever. Here, we look at the key centres of ETP business.


This is the biggest ETP market, with preliminary figures from ETFGI’s MAY Global ETF and ETP industry insight’s report noting the US had 1,591 ETFs/ETPs from 58 providers listed on three stock exchanges. It also notes that in May assets in US-listed exchange traded products reached $1.8trn.


Europe, including the UK, is the second-biggest market for exchange-traded products, with the ETFGI report noting total assets in May 2014 of $459bn. The region accounts for approximately 17.8 per cent of total market share, although it actually has more listed products than the US at approximately 2,183.