Europe's exchange-traded products shrink 5%
Last Updated on Monday, 16 January 2012 14:36
Assets held by European exchange-traded products (ETPs) declined more than 5% during 2011 – the result of negative market returns and a reduction in net inflows.
However, Europe's poor performance did not stop world ETP assets increasing 3% to $1.525 trillion, but this rate was far below the 28% growth seen during 2010. The world ETP market is still dominated by the United States, which accounts for 70% of assets, while Europe has 20%.
The figures are from a year-end report by BlackRock, which runs the iShares exchange-traded fund business, and they also show that Europe lagged other regions in terms of ETP product development. There were 258 ETPs launched in Europe in 2011 and 47 de-listed, implying a growth rate of 13%. Canada had 45% growth in products, Asia-Pacific nearly 40% and the US had 27%.
Across the world, fixed income products were among the most popular categories. They attracted $50 billion in new money, leading to an increase of 24% in assets. Developed equity products attracted more new money, but saw much of the gain wiped out by negative market performance, leaving net growth of 3%.
Emerging market equity products had a bad year with negative market returns and net outflows, leading to a decline of nearly 20% in assets.
BlackRock's survey comes at the end of a difficult year for ETPs in which some critics labelled the products a risk to financial stability. Some companies' practice of using derivatives to replicate indices – to create synthetic as opposed to physically backed products – was criticised for leaving the products vulnerable to counterparty risk.
But a new report by the Edhec-Risk Institute says the distinction between physical and synthetic ETPs is misleading and conveys “a false sense of comparative safety”. Both types of ETP are exposed to counterparty risk, especially as physical ETP providers frequently engage in securities lending, says the report.
The Edhec report adds that counterparty risk should be measured according to the collateralisation and quality of collateral used by ETP providers, not by the type of ETP. Edhec's report also says that the vast majority of European ETPs are managed within the Ucits framework and have the same levels of security and risk as any Ucits fund.
BlackRock’s iShares, which is by far the largest ETP provider with nearly $600 billion of assets as of December 2011, is twice as big as second-placed State Street Global Advisors. However, State Street operates the two largest ETPs by assets under management – two products from its SPDR range which track the S&P 500 and the gold price.
©2012 funds europe
Stock Prices
Global Trends Blog
Power to the people: The future is distributed energyIs the potential of distributed energy on your radar yet? If it isn’t, it probably should be. Energy transforms economies and lives, so it...
Role Reversal: The New Gucci GenerationIt did not escape the notice of my partner as we walked down Nathan Road in Hong Kong that the local couple ahead of us were carrying a plethora of bags...
Vietnam Calling: Growing PainsIn my last blog post, I talked about the phenomenal rise and opportunities in Vietnam, but there are also challenges ahead. Some thoughts from discussions...
Vietnam Calling: Open 24/7/365!Happy New Year! Just back from a fascinating trip to Vietnam and Hong Kong, so a few reflections to share…Standing on street corner in Ho...
People and Power: 3 Numbers That Will Impact the WorldThe headlines have been full of numbers recently, particularly as we have just passed a milestone where the 7 billionth person has now joined the world’s...
The Fight for the Interface: Who Will Be the Intermediaries of Choice?Information and communications technologies are advancing rapidly, reshaping all aspects of our work and lives, from telecommuting to how we find information...
The Power of IdeasKnowledge and information is being created and shared globally at a faster rate than ever before. In world of real-time news, consumer-ceased content and...
A Renewable Future for Flying -- If We Want ItFlying has always been a passionate interest with members of my family and I must admit I have enjoyed airshows myself, even if not the main instigator...
Newly Privatized: The Race for SpaceNASA reported today that the final voyage of Space Shuttle Endeavour, originally planned for Friday, would be delayed by several more days due to technical...
Energy: Looking for a Cleaner WorldUnder the shadow of the sobering anniversary of 25 years since the nuclear disaster at Chernobyl, Japanese workers continue to battle to contain the recent...
On a Wing and a Prayer: Japan, Libya and EgyptLarge parts of the world are this week operating on a wing and a prayer: With high levels of damage, low levels of preparation and many unknown factors,...
What’s China’s New Five Year Plan Got To Do With You? Everything!Now the world’s second largest economy, a critical geopolitical player, home to the largest population on earth and the world’s largest consumer...
The New Colonization of Africa, BRIC-styleThe eyes of the world remain on the violence in Libya and the ongoing unrest across North Africa and the Middle East, with oil prices reacting to the potential...
The Quiet Revolution: If Civil Society Were a CountryEven as the revolutionary tide sweeps North Africa and the Middle East – and potentially further afield – there is a quiet revolution going...
Digital Dilemmas: The Data Deluge, Attention Deficits and The Future of BooksThere is no shortage of information on information. Even if you are getting a little tired of data on data, an interesting article last week on The...
It’s Worth What (2) !?! Now Twitter’s Joining the Bubble Line-Up!The Wall Street Journal has set tech and investment banking pulses racing today with an article suggesting that Twitter may be a prime takeover target. ...
The Future of Global Food Security: Words Will Not Feed the WorldFood security is making the headlines again. On Thursday the UN Food and Agriculture Organization’s (FAO) Food Price Index showed global food...
A Week that Could Redefine the World: Egypt, Davos and Dr. SeussThis may be one of the weeks that redefines the shape of the world, although the impact is as yet extremely uncertain. The civil unrest that started...
It’s Worth What!?! GroupOn and Facebook… Bubble or No Bubble?Last weekend bankers, including Goldman Sachs’s big guns, were actively courting GroupOn to lead its speculated IPO this year. This week Goldman...
Hu Jintao and Barack Obama: Collaborating to CompeteThis week’s summit in Washington between Hu Jintao and Barack Obama was carefully choreographed to put the emerging relationship between China and...
