Robin Bowerman, Head of Retail at Vanguard Investments Australia.
Robin Bowerman, Head of Retail at Vanguard Investments Australia.

Supercharged ETF growth

THE total market capitalisation of Exchange Traded Funds (ETFs) listed on stockmarkets throughout the world has risen from under $US1 billion to more than $US1 trillion over the past 17 years, reports ETF Landscape, published by the UK-based research team with the BlackRock financial group.

While this global growth rate is impressive, the Australian ETF market has been enjoying breathtaking growth over recent years in percentage terms, from a much-low baser of course, as investors and advisers here become increasingly familiar with the products.

As discussed by Smart Investing earlier this month, the market capitalisation of ETFs listed in Australia leapt by 151% in the 12 months to February

Here is a quick world rundown on ETFs as at the end of February: United States, 807 ETF products, 28 providers, $US679 in assets; Europe, 901 ETF products, 35 providers, $US 220 billion in assets; Canada, 132 ETF products, four providers, $US30 billion in assets; Asia Pacific (ex-Japan), 137 ETF products, 48 providers, $US38 billion in assets; Japan, 70 ETF products, six providers, $US24 billion in assets; and Latin America, 20 ETF products, three providers, $US9 billion in assets.

With such dollars and such growth, investors who have not so far included ETFs in their portfolios could understandably be asking: What’s going on?

ETF Landscape highlights the general features of many ETFs, which would answer the question to a large extent. Such features commonly include the ability for investors to gain excellent diversification, transparency, liquidity, and flexibility from a low-cost, market-traded product.

It should be emphasised that there are a large number of highly-specialised ETFs listed on overseas exchanges such as in the US.

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Robin Bowerman, Vanguard Investments Australia's Head of Retail, has more than two decades of experience in the finance industry as a writer, commentator and editor.


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