The global ETP (Exchange traded product) industry is worth about 3 trillion dollars. This is according to the latest report Morningstar Global Asset Flow, who photographed the situation at the end of 2015. Equity products represent the largest slice of the market, but innovation directs investors towards other asset classes, first of all bonds, followed by alternatives (mainly leveraged and inverse instruments) .
Of ETPs, investors especially appreciate the mix of flexibility given by the fact that they are publicly traded and their diversified nature in terms of portfolio securities. The most popular remain the real passives, while the so-called actives are still a niche.
Growth of global ETP assets
Geographic differences
In an industry that is breaking records in terms of growth, not all regions of the globe behave in the same way. The United States is the largest and longest-lived market, but has growth rates of a mature area; while Europe and Oceania are more dynamic. Cross-border products (domiciled in so-called tax havens, such as Luxembourg and Ireland) also show a positive trend. For Asia, on the other hand, the increase could be overestimated, according to the Morningstar report, as governments have bought ETPs as part of economic stimulus plans. Conversely, the Middle East and Latin America are the areas where the organic growth rate (flows in relation to initial assets) has been negative in the last two years.
Organic growth rates by geographical area
The European case
In Europe, in particular, investors have moved in two apparently opposite but complementary directions. On the one hand, they have chosen balanced and alternative funds, which generally have active strategies; on the other hand, they largely used ETPs as passive vehicles. Overall, indexed funds (ETPs and index funds) collected 27% of the total flows towards managed savings, equal to 18% more than in 2014.
2015 was the best year ever for the replicant industry in the Old Continent. Morningstar has estimated net inflows of 70,8 billion euros, far higher than the previous record of 51 billion set in 2008. Dominating was iShares (BlackRock group) with 29,3 billion euros of net inflows.
A global phenomenon
Born as an American phenomenon, that of index funds (funds and ETPs) has become global. Excluding Asia, which is an atypical case, the United States continues to represent the largest market (37,5% of total assets are in passive products), but Europe is second with 23,2% and cross-border offers follow closely (21,9%). In terms of financial assets, the equity component is still predominant, but the bond component is growing. In 2015, the latter underwent a radical change: not only did the flows into index funds exceed those into assets, but the latter had negative net inflows.
