Winning Market Share in ETFs

Introduction

This report explores the phenomenal growth in the global market for ETFs. It differentiates markets, explaining how and why particular markets have grown. The report also looks at best practice in the ETF market, highlighting strategies for asset managers to improve their market position.

Scope

*Analyses fundamental aspects of ETFs that appeal to investors

*Examines growth rates - in terms of total turnover and the number of ETF funds - in the US, European and Asian markets

*Explains the different trading patterns in ETFs globally

*Includes strategic insight into how asset managers can improve their market position in ETFs

Highlights

While market turmoil was causing substantial shifts in the portfolio holdings of investors, working against the trend of mutual fund outflows has been a continued rise in popularity of ETFs. In the year 2000, investment in ETFs amounted to $40 billion in assets under management (AUM). Ten years later, that investment amounts to $1,032 billion.

Understand the fundamental structural differences in ETF markets globally that explain the different growth rates in turnover and the number of ETF propositions in the market. The report also suggests how these differences are likely to impact on the future development of markets.

Providing valuable market insight around strategies that combine ETF propositions that are highly regarded by investors with effective marketing, highlighting some best practices globally.

Reasons to Purchase

*Understand the global market for ETFs and why structural differences contribute to differing trading patterns across the US, Europe and Asia.

*Quantitatively benchmark your performance through 2009 against the world's largest (and some of the most successful) ETF providers

*Identify your place in the increasingly complex competitive landscape for ETFs and gain strategic insight to improve your market position


Report Highlights
While market turmoil was causing substantial shifts in the portfolio holdings of investors, working against the trend of mutual fund outflows has been a continued rise in popularity of ETFs. In the year 2000, investment in ETFs amounted to $40 billion in assets under management (AUM). Ten years later, that investment amounts to $1,032 billion.

Understand the fundamental structural differences in ETF markets globally that explain the different growth rates in turnover and the number of ETF propositions in the market. The report also suggests how these differences are likely to impact on the future development of markets.

Providing valuable market insight around strategies that combine ETF propositions that are highly regarded by investors with effective marketing, highlighting some best practices globally.
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Overview 1
Catalyst 1
Summary 1
Executive Summary 2
There has been a phenomenal increase in ETF investment over the past ten years 2
There are five significant features of ETFs which have accounted for their rising popularity 2
The US ETF market is the largest single market in the world 2
There are fundamental differences in market structure between the US, Europe and Asia 3
There are strategies that asset managers can pursue in order to grow their share of the popular ETF market. 3
Table of Contents 4
Table of figures 5
Table of tables 6
THE ETF MARKET CONTINUES TO GROW STRONGLY 7
There has been a phenomenal increase in ETF investment over the past ten years 7
Net investment in ETFs continued to be strong during 2009 7
Five key characteristics of ETFs appeal to investors 7
The US is the world's largest market for ETFs 8
The NYSE Euronext (US) is the largest trader of ETFs in the Americas 8
ETFs have gained in popularity in Europe 10
The imposition of stamp duty on ETFs slowed the development of the UK market compared with Germany and France 13
Asia's ETF market is growing rapidly 14
THERE ARE KEY DIFFERENCES BETWEEN THE US, EUROPEAN AND ASIAN ETF MARKETS 17
Trading activity in ETFs differs markedly in the US from Europe 17
Fragmentation of the European market has reduced the liquidity of ETFs 17
Differences in remuneration structures create very different markets for ETFs 17
ETFS are an evolving product characterized by different features 18
ETFs have continued to grow strongly but there are some clear winners 18
The most popular ETFs in Europe are fixed income 20
There has been fast growth in ETF equity assets in Europe 21
Investors have been warned about the more niche ETF products 21
Investors have been alerted by the failure of some ETFs 22
THERE ARE SOME KEY STRATEGIES WHICH ASSETS MANAGERS CAN PURSUE TO GAIN MARKET SHARE 23
iShares and State Street dominate the ETF market 23
Smaller players still have the opportunity to capture market share 24
Credit Suisse rebranded its Xmtch ETF range after failing to make headway in the market 24
HSBC launches its own range of ETFs in Europe 25
In the US, UBS has stopped recommending alternative ETFs 26
ETF providers and other stakeholders can collectively address industry issues 26
BNP Paribas managed both ETF product and marketing innovations simultaneously 26
NYSE Euronext and EasyETF launch European low-carbon index & ETF managed by BNP Paribas 26
APPENDIX 28
Methodology 28
Bibliography 28
Further reading 28
Ask the analyst 28
Datamonitor consulting 28
Disclaimer 28
List of Tables
Table 1: Total turnover and number of ETFs listed on exchanges in the Americas, 2005-2009 10
Table 2: Total turnover and number of ETFs listed on exchanges in EMEA, 2005-2009 12
Table 3: Total turnover and number of ETFs listed on exchanges in Asia Pacific, 2005-2009 16
Table 4: Top ten most traded ETPs in Europe (by volume), November 2009 19
Table 5: European ETF assets by type of exposure, ranked by AUM, as at end August 2009 20
Table 6: European ETF asset growth, as at end August 2009 21
Table 7: iShares and State Street Global Advisers dominate ETF AUM (December 2009) 24
List of Figures
Figure 1: The US has been a rapidly growing market over the past five years 8
Figure 2: NYSE Euronext (US) dominates the Americas market for ETFs 9
Figure 3: Germany dominates ETF turnover and the number of listed ETFs in Europe 11
Figure 4: ETF trading on the London exchange has grown strongly, particularly in the last year 13
Figure 5: Asia Pacific: top six exchanges by ETF total turnover 14
Figure 6: Asia Pacific: second top six exchanges by ETF total turnover 15
Figure 7: iShares continues to dominate the market for ETFs 23

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