The European exchange traded products (ETP) market will more than double in size by the end of 2017 to reach $900 billion in assets, the global head of Blackrock’s iShares funds said today.
Mark Wiedman said the market was on a “wild ride”
“In Europe, assets held in ETPs hit a new high of $387bn at the start of this year. We’re predicting the European ETP category will more than double over the next five years to over $900bn.”
Increased use by institutional clients, including asset managers using ETPs to implement investment decisions in active, passive and blended portfolios, is among five key drivers of growth Blackrock identifies. Recent analysis by iShares suggested the ETP holding by some of the largest global asset managers had increased by over 30 per cent per year.
Other factors driving growth include greater uptake by retail investors, greater use of asset allocation products and structured wraps based on ETPs, infrastructure changes improving liquidity in the European market, and a “revolution” in fixed income products. Illiquidity in fixed income markets means trading fixed income ETPs on-exchange can now be cheaper than trading the underlying bonds, Blackrock’s release stated.
“The growth of the ETP industry has much further to go,” Wiedman said. “Compared to the market size of other investment vehicles, in segments such as securities, mutual funds and derivatives, ETPs have huge headroom for growth, even in the more mature markets of Europe and the US.”
The comments follow figures earlier this month from consultant ETFGI showing net global inflows into ETPs of $73.4bn in the first quarter, with fixed income products accounting for $8.4bn. Its analysis of reported share ownership also showed the number of institutional investors to have used ETFs (exchange traded funds) and ETPs globally grew at a compound annual rate of 8.9 per cent in the five years to 2011.
ETFGI managing partner Deborah Fuhr, said: “The increasing number of institutional investors globally using ETFs and ETPs is an important factor driving the growth in net new asset flows as well as the growth in total assets under management.”
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