Global ETF assets hit $6T

Global ETF assets have surpassed $6 trillion this year, according to new research from EPFR, a subsidiary of Informa Financial Intelligence and a provider of fund flows and allocation data to financial institutions. (All figures are in U.S. dollars.)

From Jan. 1 through Oct. 31, 2019, global ETF assets increased by $840 billion globally to hit the new trillion-dollar high, the firm said in a release. In fact, including 2019, global ETF growth has resulted in new trillion-dollar highs in each of the last four years, it said.

“The global growth of ETFs is undoubtedly an ongoing validation of how financial institutions and investors are electing to allocate,” said Cameron Brandt, director of research at EPFR, in the release. The $6-trillion milestone provides “an important inflection point of how much growth has occurred over the last decade since the global financial crisis as well as to look ahead at future potential growth areas.”

Growth in equity ETF assets over the last several years has been considerable relative to that of equity mutual funds. As a proportion of all assets under management (AUM) of global equity ETFs and mutual funds, global equity ETFs accounted for 0.3% in 2002, compared to 99.7% for global equity mutual funds. Global equity ETF assets now account for 23%.

What hasn’t much changed is ETF allocation breakdown by asset class. Since the financial crisis, about 77% of global ETF allocation went to equity ETFs, compared to about 19% to bond ETFs and about 4% to commodity ETFs.

Geographical changes are slowly occurring. While $4.2 trillion of the $6 trillion in global ETF assets are domiciled in the U.S., other parts of the globe have also realized an increase in fund flows since the financial crisis, the release said. For example, cumulative flows have increased for equity ETFs groups such as Japan and Europe.

The research also found a surge in relative flows into ETFs with socially responsible (SRI) or environmental, social and governance (ESG) mandates, compared to all equity ETFs. EPFR attributed the emerging trend of SRI/ESG investing to the preferences of a growing cohort of millennial investors.

Maddie Johnson

Maddie is a freelance writer and editor who has been reporting for Advisor.ca since 2019.