Presented by Syntax Advisors.
Margareta Hricova: Welcome to ETF TV – your insight into the world of exchange traded funds, issuers and investments. I am Margareta Hricova and joining me today is Deborah Fuhr and we’ll be doing a special episode on ETFG’s end of year 2021 research.
Deborah Fuhr: Thank you.
So given there’s so many interesting tidbits of information, it was a phenomenal year for the ETF industry, globally, but in almost every jurisdiction, so I thought we would run you through some of the data from our research.
On this first slide, we’re looking at the global ETFs and ETP industry from 2005 to the end of 2021. You can see that the growth has been very significant and we ended 2021 with 9877 products, 20.007 listings.
Assets have reached a record 10.27, or rounded up 10.3 trillion US dollars. There are 608 providers. Products are on 79 exchanges in 62 countries.
The US has 2805 products. Assets have reached a record 7.2 trillion US dollars. If we look at the net new assets or creations vs redemptions, December had 116 billion. Year-to-date, it was 919, and there’s 233 providers in the US.
Looking at Canada there’s 962 different products. Many products have multiple listings or share classes, and so the number of listings as opposed to unique, primary listings is 1212. We can see the assets are 273. Net inflows for December were 3.9, and year-to-date, a record 46 billion.
We have record assets in really all of the jurisdictions around the world, and the net inflows in most markets are also at a record level. The most significant being, on a global basis, the ETF industry gathered 1.3 trillion US dollars last year, so a very significant increase from the prior year.
The overall industry was up by 28.5%, but you can definitely see that there is regional variations where in Japan, assets only increased 1.1% as the Bank of Japan has not been buying ETFs the way it has been in the past. The US is up by 32%. Canada, 35%. Asia-Pacific, 29%. Latin America is up by 30%.
The majority of money has been going into equities, so 910 billion. Fixed income, 238. Compare that to the prior year, and you can see there’s been a significant increase for equities, up from all of 2020 at 365 billion. We can see that active ETFs, globally, accounts for 4.3% of all the assets. They did take in more money this year than last year, so a 131 billion of net new, up from 91 the prior year. What I would say is there’s regional variation in terms of how many active products in the assets. So in Canada, active ETFs have been allowed non-transparently since the beginning of ETFs, and they account for about 22% of the assets in Canada and much less in other markets.
Commodities had net outflows for 2021, while if we look at 2020, 61 billion of net new went into commodity products that year.
The top three providers account for 66% of all assets, globally. Those providers are iShares, which has 3.3 trillion, or 32% market share. Vanguard is second with 2.2 trillion, or 21.8% market share, followed by State Street and SPDR ETFs with 1.2 trillion, or 11.7% market share. It is a very global list. This is just the top 20, and you can see they come from Japan, from Canada, the US, Europe, etc.
Looking at index providers, S&P is the largest in terms of assets tracking their benchmarks, accounting for 2.8 trillion or 27% of all the assets. MSCI would be second with 1.46 trillion or 14.3% market share, followed by FTSE Russell with 1.09 trillion or 10.7% market share.
668 ETFs have reached, individually, over two billion in assets, and collectively they account for 82% of all the assets. Clearly, break-even is gathering over 100 million, but two billion means you are really a go-to ETF for many investors.
Fees is another hot topic, so there’s 562 ETFs that have annual costs of between 0 and 10 basis points, accounting for just over $4 trillion. If we were to add in products with fees of between 10 and 20 basis points, we’d add in another 1200 products and another $2.3 trillion. So the majority of products are in the 0-10 and 10-20 basis points. And the asset weighted fee for the whole industry is 21 basis points. Overall, asset weighted, iShares is 20 basis points, Vanguard overall, asset weighted, is six basis points annual cost, and you can see the variation for equity, fixed income and commodities for those who have it.
And it is interesting because leverage and inverse, and some of the more commodity-oriented products tend to have higher fees. But you also see First Trust, actually on a relative basis, has pretty high fees compared to other issuers.
And then where did the money go? Well, the most popular, developed market indices out there is the S&P 500 index, which has 1.3 trillion dollars in it. Based on monthly net inflows, that was also the most popular exposure for ETFs last year, in December. If we look at emerging markets, the MSCI Emerging Markets Investable Index is the largest and it has $96 billion in it, followed by the FTSE Emerging Markets and then MSCI Emerging Markets, which is a slightly different benchmark than the first one.
What we see as you look down the list is the majority of new money going into emerging markets has gone into exposure to China, CSI 300, there is some overall emerging markets, but then the SSE 50 Index, CSI 500, there’s a Korean overseas China, there’s Hang Seng China Enterprises. So clearly people have been looking at China as a place to put money to work.
And then in terms of fixed income, the most popular benchmark would be the Bloomberg Barclays U.S. AGG, and when we look at where did money go in December, the ICE U.S. Treasuries are going into short-term, high yield, again AGG.
In terms of new launches, last year, overall, there was 1814 new products. The largest number of new listings took place in Asia Pacific ex-Japan (AxJ), followed by the US and then by Europe. And in terms of exposures, equity accounted for about 50%. Active was significant, accounting for 24.3% of all new launches. And then you can see there were leverage inverse and also fixed income.
And in terms of types of new products coming to market, rather than the 2.4% in non-ETF structures, 22% of new products were not structured as ETFs. In closures, there were 386, really spread around the world.
So, who had the most successful products coming to market last year? Well, not surprisingly, the Dimensional Funds mutual fund conversions into ETFs feature on this list, they were large mutual funds that were able to convert into transparent, active ETFs.
Also on this list, we see there are a number of products providing exposure to China. There are some ESG in there. There’s some thematics, and there’s also the Bitcoin ETF that was listed in Canada by Purpose, and the Bitcoin ETF made available by ProShares in the US. One is based on SPOT in Canada, the other is based on trading futures, which is the only way you can currently do it in the US. So a pretty interesting array of products that have come to market, really representing the trends that we’ve seen.
ESG, active, crypto, and thematics have been very popular over the past year as well as exposure to China. I hope you found this interesting. Thank you for joining us.
Margareta Hricova: Thank you, Debbie, and thank you to our sponsors, Syntax Advisors and to all of you for watching. To watch prior episodes and to see news from the ETF industry, visit us at ETFTV.NET.
ETF TV news does not provide investment advice, nor recommend products.