UK - The exchange traded fund (ETF) market is set to pass the US$1trn mark next year, but greater investor understanding of the different types of ETF vehicle available is needed, iShares has said.
The company said the rapid growth was based on the liquidity, transparency and simplicity of ETFs, but added the market could risk fracturing.European ETF assets themselves are predicted to rise to over $200bn from $155bn.
Rory Tobin, CEO, iShares Europe, said: "The European market is growing at a rapid rate. For investors, a critical question is whether they understand the key differences in the various ETFs being offered, most notably the differences in structure, cost, risk and return."
The company said investors in ETFs should be aware of the different types of product available on the market, with particular reference to the differences between swap and physical-based ETFs.
iShares said it was therefore important for investors to be educated in order to be able to understand the differences between the various types of ETF, the strengths and weaknesses of them and the role they may play in a portfolio.
To this end, the company said it had produced a range of educational materials for investors.
Tobin added: "As the world's largest ETF provider, we believe that it is our responsibility to assist clients in this regard. We welcome this opportunity to engage with clients in developing this broader understanding of the ETF marketplace."
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