Global ETF/ETP Assets Forecast to Surpass Hedge Funds During Second Quarter
According to ETFGI, global assets in ETFs/ETPs are expected to exceed those in hedge funds. At the end of the first quarter, ETFGI estimates that hedge funds contained just $13 billion less than ETFs/ETPs globally. In Q1 alone, ETFs/ETPs gained $US96 trillion, compared to just US$18 trillion for hedge funds. Reasons for this growth include an “expanding toolbox of index exposures to various markets and asset classes, including hedge fund indices and some active and Smart Beta exposures”, intraday liquidity, transparency, small minimum investment and lower costs than many other investments. ETFGI estimates the average annual cost for an ETP is just 31 basis points, significantly less than the “2 & 20” or 2% management fee plus 20% of profits charged by most hedge funds. Also cited in this growth was the relatively solid performance of equity indexes, as the S&P 500 has risen by double digits in each of the last three calendar years. A copy of the full report can be found on the ETFGI website.
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