Investments  

ETFs celebrate 15th London anniversary on a high

ETFs celebrate 15th London anniversary on a high

The growth of exchange-traded funds has radically transformed investment strategy and helped advisers to place an increasing focus on passive management, Mark Makepeace has said.

Celebrating the fifteenth anniversary of the first ETF listing in London, in April 2000, the director of information services for the London Stock Exchange Group paid tribute to the exceptional growth of the fast-evolving industry in the UK, Europe and globally.

Mr Makepeace, who is also chief executive of FTSE Group, said this owed much to the rise of passive investment strategies being adopted by investors and advisers, adding: “While we do not expect another 4,000 per cent rise in turnover in the next decade, market appetite remains strong and we expect further exceptional growth in these products in the coming years.”

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Deborah Fuhr, partner and co-founder of consultancy ETFGI, said: “In the past year ETFs have really started to be embraced by investors in Europe, and have seen record inflows last year.

“With the introduction of RDR in the UK and Holland, advisers are increasingly using ETFs as they are a good alternative to other investment tools, including futures, for many exposures. Many investors hold ETFs for the long term, while others are more tactical and adjust to political and economic news.”

According to LSE data, the London ETF market, including all listed exchange-traded products, has grown from £3.9bn turnover in 2004 to £185.8bn in 2014, a 4,712 per cent increase in the past 10 years.

There are now 791 ETFs trading on the LSE, the largest venue for ETFs in Europe.

ETF Key Statistics

There are now 791 ETFs available on the LSE, 62 of which track FTSE indices and nine are linked to Russell indices.

London Stock Exchange ETF trading is the largest in Europe with 33.4 per cent market share, as at February 2015.

There are now 675 ETFs listed on Borsa Italiana, 80 track FTSE indices and nine are linked to Russell indices.

European listed ETFs registered record inflows of €77bn (£55.3bn) in 2014, more than triple the number in 2013.

Combined global assets under management for FTSE and Russell-linked ETFs is now a record high of US$385bn (£253.8bn)

Over US$20bn (£13.2bn) are linked to FTSE China indices.

Adviser View

Adam Laird, passive investment analyst at Bristol-based Hargreaves Lansdown, said: “ETFs have gone from strength to strength in the UK, though they are yet to gain the same popularity as they enjoy in the US. We see investors holding ETFs as a core investment in their portfolio, as well as using them to access spicier areas of the market.

“ETFs offer access to a wider range of markets than tracker funds, and investors can buy and sell throughout the trading day. They can, however, be more complex, so investors need to make sure they thoroughly research the ETFs they are investing in.”