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By Beverly Chandler, Opalesque London:
A new report from Strategic Insight and BNY Mellon Asset Servicing reveals that ETFs in the US are now worth just over $1 trillion and for an industry of its size, the sector is still showing signs of rapid growth.
The study, ETFs 2.0: The Next Wave of Growth and Opportunity in the U.S. ETF
Market, predicts that ETF assets including Exchange Traded Notes, will hit $2 trillion before the end of 2015 as a wider array of ETF managers and a greater variety of ETF products emerge.
The authors believe that a large part of ETFs’ faster growth has been because ETFs are relatively new to the marketplace and growing from a smaller base of assets. "But" the report notes, "ETFs have
also drawn net inflows from investors totaling $100 billion or more in four straight
years (2007-2010) during good, bad and rebounding markets. Net new flows to
ETFs peaked in the troubled year of 2008, at $177 billion, and through the first
quarter of 2011, they have been on pace for a fifth consecutive year of over $100
billion in net inflows."
The appeal of the ETF can be laid at the door of its core characteristics, says the report. They tend to cost relatively less than actively managed mutual funds (both because they are passive and because trading on exchanges reduces shareholder servicing costs); ETFs can be bought and sold throughout the day; they can keep smaller cash reserves, as exchanges handle much of the inflows and out...................... To view our full article Click here
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