The rise and rise of exchange traded funds

DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
EXCHANGE TRADED FUNDS: OFFERING INVESTORS SUNSHINE ON A CLOUDY DAY? 2
Five key characteristics of ETFs appeal to investors 2
The broadness of exposure is an issue in the ETF market, with distinctions in investor preferences 2
The US is the world's largest market for ETFs 3
ETFs are gaining in popularity in Europe 4
Germany's Xetra is Europe's largest ETF exchange 5
France is Europe's second largest ETF market 5
The UK remained behind Germany and France in part because of the imposition of stamp duty 6
ETF growth across Europe will be slow but positive, except in the UK where ETFs will see a slight decline in 2009 7
Hong Kong's ETF market is growing rapidly 9
The range of ETFs is diverse but asset managers should promote appropriate funds 10
The recent proliferation in ETFs has been in the more narrow funds and broadness of exposure is an issue 10
Some wealth managers are not keen to promote ETFs but they will still forge ahead 11
'Accentuate the positive, eliminate the negative': wealth managers should assist clients to prepare for the eventual recovery 12
THE LARGEST GLOBAL PROVIDERS ARE EXPANDING THEIR RANGE OF ETFS AND ACTIVELY SEEKING INVESTORS 12
iShares was the first provider to launch ETFs and now has over $300 billion in AUM 12
iShares has reported investors seeking refuge in ETFs 12
ETFs are well explained on Barclay's Global Investors' website 13
State Street Global Advisors is the second largest ETF provider with $130 billion in AUM 15
Vanguard is ranked third by AUM, but is far smaller than the two largest players 18
Lyxor Asset Management, owned by Société Générale, is the fourth largest ETF company 20
Lyxor has launched the first ever ETF focusing on the Gulf region 22
Lyxor also launched commodity ETFs in 2008 22
PowerShares is owned by Invesco and is the fifth largest provider of ETFs globally 23
ProShares has a range of 76 ETFs, offering investors 'short' and 'ultra' Proshares 24
db x-trackers 25
Nomura Asset Management 25
Bank of New York 26
Nikko Asset Management 26
Daiwa Asset Management 27
Daiwa has launched a Shariah compliant Japanese ETF listed in Singapore 27
Credit Suisse Asset Management 27
BNP Paribas managed both ETF products and marketing innovations simultaneously 27
NYSE Euronext and EasyETF launch European low-carbon index and ETF managed by BNP Paribas 27
APPENDIX 29
Bibliography 29
Methodology 29
Further reading 29
Ask the analyst 29
Datamonitor consulting 29
Disclaimer 29
List of Tables
Table 1: iShares offers equity, fixed income and commodity ETFs 15
Table 2: State Street Global Advisors's ETFs focus on US and international sectors/industries 16
Table 3: Vanguard has a range of 38 ETFs on offer, representing $40.23 billion in AUM 19
Table 4: Lyxor manages a broad range of ETFs, with many distinguished geographically 21
Table 5: PowerShares offers a very comprehensive sectoral range of ETFs 23
Table 6: ProShares offers its own 'short' and 'ultra' ETFs designed to meet the needs of different markets 25
List of Figures
Figure 1: ETF growth in the US will reach close to 25% by 2012 when the stock market has recovered 4
Figure 2: Germany's ETF market has exploded in the last five years 5
Figure 3: Euronext's NextTrack ETFs have grown strongly in the past few years 6
Figure 4: ETF trading on the London exchange has grown strongly, particularly in 2008 7
Figure 5: After lackluster growth in 2009, Europe's ETF market will grow strongly again 8
Figure 6: Hong Kong's ETF market boomed in 2007 9
Figure 7: Hong Kong's ETF market will grow by nearly 35% year-on-year by 2012 10
Figure 8: Spelling out ETF basics for investors 13
Figure 9: iShares stresses that its ETF are different 14
Figure 10: SPDR is the propriety name for SSgA's ETFs and the website is full of information about product range and performance 17
Figure 11: Vanguard has an attractive website offering ease of accessibility to its range of ETFs 20
Figure 12: Lyxor provides a list of key benefits of Lyxor ETFs 22
Figure 13: Invesco PowerShares offers 'active' ETFs 24