GLOBAL - Assets in exchange traded funds are expected to grow by some 34% in 2003.
According to Morgan Stanley vice-president and ETF analyst, Deborah Fuhr, the next twelve months should see ETF assets grow to around US$190bn, with the launch of new fixed-income vehicles helping to lure investors.
ETFs experienced robust growth during 2002, buoyed by strong popularity among institutional investors.
Data from Morgan Stanley shows that ETF assets under management increased by 35% during 2002, from US$104.7bn to US$141.6bn.
The increase was bolstered mainly by Japanese listings which soared by 218% (to US$21bn), followed by Europe (91% : US$10.7bn) and the US (21% : US$102.3bn).
Institutional investors accounted for 80%-85% of commitments in Europe and Asia; in the US the figure was around 70%-75%.
The number of products increased by 39% to 280 ETFS, cross-listings increased by 57% to 369, the number of managers grew to 28, and the number of exchange segments listings ETFs increased to 26.
Europe outstripped both the US and Japan with the largest number of products at 118 and 192 cross-listings. It also had the most product launches at 47 and accounted for all 53 cross-listings during the year followed by the US (15) and Japan (10). Europe also has the largest number of managers at 14, followed by the US (6) and Japan and Korea (4 each)
Average trading volume was down by 22 million shares, or US$1.5bn, in December compared to November to hit 153 million shares.
ETFs are open-ended mutual funds that trade on stock exchanges. According to Morgan Stanley, applications for ETFs including core equity holdings, sector and style plays, international diversification and portfolio hedging.
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