Deborah Fuhr

Global Assets under Management (AUM) for Exchange Traded Fund (ETF) has been forecast to reach $22.3 trillion by the end of 2025, Managing Partner, Founder, ETFGI, Deborah Fuhr has said.

She disclosed in a document obtained by the New Telegraph in Lagos.

Fuhr said the ETF industry has continued to extend its stunning track record of expansion in the world.

“ETFs listed globally have an asset-weighted average expense ratio of 23 bps,” she said. “The cheapest products track fixed income indices at 20 bps while the most expensive are leveraged ETFs at 89 bps. There are 411 ETFs with an expense ratio less than 10 bps while there are 249 ETFs with an expense ratio greater than 100 bps”.

She explained that there were 81 new ETF/ETP product launches in October with a total of 712 from 170 different providers so far in 2018.

“In previous years there were 714, 723, 736 and 596 launches over the same period in 2017, 2016, 2015 and 2014 respectively,” Fuhr added. “The largest number of product launches over the course of a year was 964 in 2010, and the largest number of launches during the first 10 months of the year was in 2010 with 830 launches.

“There were 23 ETF/ETP closures in October and a total of 259 from 62 providers so far in 2018. In previous years there were 341, 275, 267 and 163 closures over the same period in 2017, 2016, 2015 and 2014 respectively. The largest number of product closures over the course of a year was 411 in 2017, and the largest number of closures during the first 10 months of the year was in 2017 with 341 closures.”

Chief Executive Officer, NSE, Mr. Oscar Onyema, said that the introduction of Exchange Traded Products (ETPs) was one of the Exchange’s strategy to enhance diversification as well as broaden the options available in the capital market to support the efficient implementation of investment strategies across diverse asset classes and instruments.

Onyema stated this last week at the annual ETPs Conference tagged “Exchange Traded Products: Evolving investment themes, Accessing New Markets and Enhancing Portfolio Alpha”.

“Globally, ETPs have grown remarkably this year recording net flows of approximately $358 billion as at October 2018,” he said. “According to ETFGI, the Global ETP industry had close to 15,000 ETPs listings on 71 exchanges with assets of about US$5 trillion cutting across 392 providers at the end of October 2018”.

He explained that ETPs were one of the most significant financial innovations in recent decades and has shaped the financial markets.

“Since the introduction of ETPs in 1993, they have gained widespread acceptance in most developed markets,” he said.

“Over the last 15 years, investors’ demand for ETPs (both retail and institutional) has grown remarkably, which in turn has led to a greater variety of products offered by ETP sponsors.

“It is interesting to note that equity-based ETPs make up 76.7 per cent of global ETP listings whilst Fixed Income based ETPs represent 16.7 per cent of listings, similar to the asset split in Nigeria.

“The cross-listing of ABSA’s Newgold ETF on the Nigerian Stock Exchange in December 2011, opened up the ETPs market. Since then, the ETPs space has grown steadily by a cumulative average growth rate of 8% over the last 4 years. Currently, there are 9 ETPs listed on the Exchange – 2 thematic ETFs providing access to Pension-compliant and Shariah-compliant stocks, 2 broad equity market ETFs tracking the NSE 30 Index, 3 sector based ETFs, 1 commodity ETF, and 1 bond ETF tracking exposure to benchmark FGN Sovereign Bonds”.

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