GLOBAL - ETF assets under management are expected to surge from the current US$574bn to over $2trn by 2011, Morgan Stanley has claimed.
The ETF space is still largely dominated by the US with $406.8bn in AuM, followed by Europe ($89.7bn) and Japan ($34.6bn).
In its 2006 year end review, Morgan Stanley showed institutional investor demand for ETFs rose 27% in 2006, and by a massive 345% in the past six years. The firm also highlighted the 61% increase in the number of hedge funds reporting using US listed ETFs or HOLDRS over the past year.
During 2006, the proliferation of new ETFs continued to gather momentum, with 279 ETFs launched - more than double the 119 launched in all of 2005, and more than five times the 52 launched in 2004.
Certain corners have raised concerns the market could become saturated, and with plans to launch a further 516 ETFs already announced, those fears will no doubt worsen.
In an earlier interview with Global Pensions, Marie-Pierre Ravoteur, co-head of the EasyETF development platform jointly managed by AXA Investment Managers and BNP Paribas, said:
"You could argue that there are too many products in the market place at present. The worst case scenario is that products are being created where there is no demand, and obviously that is bad for the industry as a whole."
Ravotuer added the four key players in Europe had been "so aggressive" in their approach. "We have all brought out many new products, and all want to be the first to tap new markets with new products," she said, and added that the market would probably see a degree of consolidation going forward
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