In 2013 the global ETF market registered 406 new launches, bringing the total number of global products to 3,581 as of the end of 2013. US took the lead with 142 new ETF launches followed closely by Europe (132), Asia Pacific (90) and Rest of the Word (42).
The Global ETF market was relatively more active in 2012 and 2011 with 465 and 599 new ETF launches, respectively.
Globally, Equity ETFs witnessed 284 new launches over 2013, higher than 2012 which totaled 266. The US recorded the highest number of equity ETF listings in 2013 with 93 new launches; while Europe saw 88 new launches which are well above the previous year’s total of 62. Moreover, these two regions experienced a large number of delistings this year; 59 in Europe and 34 in the US. Furthermore, Asia Pacific and the Rest of the World witnessed 74 and 29 equity ETFs launches in 2013, respectively.
Fixed income ETF launches decelerated in 2013 with 97 new launches, down from 140 new launches in 2012, bringing the total fixed income ETFs globally to 701. The US ETF market witnessed the largest number of new fixed income ETFs in 2013 with 41 products, followed by Europe (35). Most of the Fixed Income ETFs launched in the US and Europe were benchmarked to sovereigns and corporate bonds. Also, the largely equity-dominant Asia Pacific market witnessed 11 fixed income ETF launches, taking its tally to 46 by end of 2013.
Globally, alternative, commodity and multi asset ETFs had a quiet year with 7, 7 and 9 new ETFs respectively in 2013. In 2012, the above asset classes had recorded 15, 25 and 17 new launches, respectively.
Some of the products launched during 2013 deserve special mention. As investors seek improved risk adjusted returns, ETF providers have launched 37 smart beta ETFs globally over the last year. Unlike traditional ETFs which are benchmarked to marketcap based indices, smart beta ETFs are benchmarked to non-market cap based indices.
Also, in the view of volatile foreign exchange markets, many providers offered currency hedged ETFs to cover the risk of FX rate movements. Europe alone saw 35 new currency hedged ETFs (equity and fixed income).
Here is a link to the report quoted above.
ETFs fill a gap in the market represented by the difficulty many investors have in buying a low maintenance instrument offering exposure to a broad market or theme. The fact that the management fees are comparatively low and that they are exchange traded represent additional positive aspects.
However, not all ETFs are simple instruments. The complexity of products ranging from leverage to quasi debt instruments to opaque management structures and an increasing differentiations between what are trading vehicles and what are investor appropriate for investors mean that performing due diligence is essential.
Another aspect of the market worthy of consideration is that ETF providers tend to launch a large number of products in the hope that some will capture investor interest and assets under management will increase which helps traded volume. However, this also means that a number fail to attract assets and remain highly illiquid. This means that one needs to have a view not only on the when to sell but how to sell before the initial purchase is made for all but the most liquid instruments.
Aside from these considerations, the range of products available is likely to continue to grow and ETFs represent an indispensible convenience for an increasing number of investors.Back to top