The total amount of assets invested in actively-managed exchange traded funds or exchange traded products in November increased 2.7 per cent month-on-month to reach a new high of $151.24 billion (Dh555.4bn), according to a report from ETFGI, an independent research and consultancy firm.
The bulk of this investment is held in actively-managed fixed income funds, rather than equity funds, ETFGI said.
“Substantial inflows can be attributed to the top 20 ETFs or ETPs [exchange traded products] by net new assets, which collectively gathered $3.39bn in November. JPMorgan Ultra-Short Income ETF gathered $580.16 million alone,” the report noted.
An ETF is a type of investment fund that can be traded quickly and easily, similar to stocks and shares. They come with no upfront costs apart from the brokerage's dealing charges and annual fees, which are generally much lower than traditional mutual investment funds.
The global active ETF industry had 747 funds at the end of November 2019, with 964 listings from 147 providers on 24 exchanges in 58 countries.
Fixed income-focused, actively-managed ETFs listed globally attracted net inflows of $3.47bn in November, bringing the total for the first 11 months of the year to $29.94bn, greater than the $24.32bn net flows into active fixed income products in the same period last year.
Global ETF assets are poised to more than double to $12 trillion by the end of 2023, and could reach $25tn by the end of 2027, BlackRock said in a May 2018 report.
"Lower-cost, diversified ETFs will increasingly be used by self-directed retail investors and sophisticated institutions alike as core broad market exposures," BlackRock said.
The overall amount of money held in ETFs and ETPs also hit a record of $6.12tn at the end of November, ETFGI said. The bulk of this is held in funds which passively track indexes such as the S&P 500 containing the biggest companies in the US, or the MSCI Emerging Markets index.
The use of ETFs in the Middle East is still "much lower" than in Europe and Asia, Deborah Fuhr, managing partner and founder of ETFGI told The National earlier this month.
"Listed and traded on exchanges like a share in the US, ETFs are more tax efficient than mutual funds … Initially an index product — which is still the majority of the assets — ETFs are used by many investors that find it hard to locate active funds that consistently deliver alpha,” she said.
