Global ETF industry outpaced hedge fund growth in 2016

By The IJ Staff | March 08 2017 09:45AM

Photo: Freepik

The Exchange Traded Fund/Exchange Traded Product Industry grew faster than the global hedge fund industry in 2016, according to a report from ETFGI, an independent research and consulting firm.

In terms of assets invested, the ETF/ETP industry first surpassed the hedge fund industry at the end of Q2 2015. By the end of 2016, assets invested in the ETF/ETP industry surpassed assets invested in the hedge fund industry by US$530 billion.

Both industries broke records

Both industries broke records last year, according to ETFGI’s analysis. US$3.548 trillion was invested in the 6,630 ETFs/ETPs listed globally at the end of last year, and the global hedge fund industry reached US$3.018 trillion invested in 8,326 hedge funds at the end of 2016.

Over the past years, investors have grown increasingly disappointed in hedge funds’ high fees, performance and lack of liquidity, says ETFGI. Last year, the performance of the HFRI Fund Weighted Composite Index was at 5.5 per cent, while the S&P 500 Index had an 11.9 per cent return. This general trend has been observed over the past six years.

Investors happy with index returns

ETFs/ETPs, however, have seen positive performance of equity markets, and many investors are happy with the index returns and fees, says ETFGI.