Investment in ETFs Outperform Hedge Fund Market

Assets invested in the global exchange traded product (ETF) market surpassed investment in the hedge fund industry at the end of second quarter, according to consultancy firm ETFGI.

According to a report recently published by the ETFGI, investment in the global ETF market reached $2.971 trillion at the end of the quarter, outdoing assets invested in the global hedge fund industry by $2 billion.

Investment has taken off in ETF/ETFPs since the financial crisis, with assets invested in the products increasing from around $750 billion in 2008 to just under $3 trillion half way through 2015.

Industry participants are calling for ETFs to become more accepted forms of collateral, as the availability of high-grade collateral continues to decline.

Speaking in Global Custodian’s Summer Issue, Andrew Jamieson, head of client execution and broker-dealer sales, EMEA, at BlackRock’s iShares, says ETFs could be the way forward in bridging the collateral gap.

“As the collateral squeeze continues, more and more collateral from different sources will have to be utilised. This [ETFs] is already out there. I think as the liquidity and size of product continues to grow, the inherent diversification of the product is very appealing,” Jamieson said.