Record Highs Hit by Investments in European ETFs

A new research from ETFGI, an independent research firm has some good news at last for post Brexit UK. At the end of July 2016, investments in exchange traded funds and exchange traded products saw a rise and reached a record high of $539 billion worth of assets in Europe.

Investments were made in 2,200 ETFs/ETPs from 54 providers listed on 25 exchanges in 21 countries at the end of July this year, the research shows. With investments to the tune of $2.4 trillion in the U.S., $191.8 billion in Japan and $81.19 billion in Canada, investment into global ETFs space was also reported at record highs in the report.

Investors have been forced to scramble to find other options that involve lower fees and higher returns since there has been a fall in the yields for traditional investments to record lows. For reasons that include the events surrounding the Brexit vote, there is global uncertainty which has resulted in traditional forms of investments such as equities and bonds in developed markets failing to provide enough yields back t the investors.

Advises of starting to look at areas like emerging markets and other forms of investments such as index trackers that tend to pay higher returns for lower fees have been given by analysts to help the investors get a better yield on their investments.

The record inflows into ETFs and ETPs are due to markets slowly returning to pre-Brexit confidence levels said Deborah Fuhr, managing partner at ETFGI in an official statement.

“Investor confidence returned during July after the surprising result of June’s Brexit vote. Developed markets outside the U.S. gained 5.1 percent and emerging markets were up 4.8 percent,” Fuhr said in a press release adding that the S&P 500 was up 3.7 percent in July.

The fixed income ETFs were the most popular among investors, the report further adds.

“Fixed income ETFs/ETPs gathered the largest net inflows with $4.80 billion, followed by commodity ETFs/ETPs with $2.59 billion, and equity ETFs/ETPs with $2.20 billion,” the report stated.

Meanwhile, SPDR ETFs managed ot gather $1.12 billion and ETF Securities garnered $1.08 billion, Meanwhile, iShares gathered the largest net ETF/ETD inflows in July and clocked with a total of $6.94 billion.

Due to the low fees as compared to active management, allocating their money into ETFs has been an exciting proposition for investors across the world. With AUM standing above $3 trillion (£2.2 trillion), ETFs have been growing at an annual growth rate of approximately 25 percent over the past decade, a report from S&P Global last month showed. Both retail and institutional investments experienced this trend in investments.

“Institutions too are increasingly using ETFs for core exposures and access to smart beta strategies,” the report said.

(Adapted from CNBC)

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Categories: Economy & Finance

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