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Global ETF launches hit a record in the year’s first eight months, driven by demand for a wider range of the products from investors and advisors.
Through September, 1,192 new products were launched this year, according to data from U.K.-based research and consulting firm ETFGI. That tops the previous record of 1,140 new ETFs listed year-to-date in 2021, ETFGI reported.
BlackRock Inc.’s iShares led with 58 new exchange-traded funds, followed by 45 at Global X. Vanguard Group, the world’s second-biggest ETF issuer, wasn’t among the top 15.
After accounting for 347 closures, the net increase stands at 845 products, the report noted.
Source: ETFGI
Factors Driving ETF Growth
The surge in ETF launches is driven by a growing acceptance of ETFs across a broad spectrum of investors, said to Deborah Fuhr, managing partner and founder of ETFGI and a member of etf.com’s editorial advisory board.
“ETFs are being embraced by various types of investors—retail, advisors, and institutions—around the world,” Fuhr told etf.com.
Fuhr furthermore noted that asset managers are increasingly recognizing the advantages of the ETF structure. Fuhr mentioned “the embracing of the ETF wrapper as a delivery mechanism for more asset managers” as a key driver of growth.
The United States led with 403 new funds, followed closely by the Asia Pacific region (excluding Japan) with 390, and Europe with 178, according to the ETFGI report.
Among the new products, actively managed funds led with 529 launches, followed by 408 equity and 118 fixed income offerings, the report stated.
Cryptocurrency ETFs have emerged as a strong force in asset accumulation, with the iShares Bitcoin Trust (IBIT) holding over $21 billion in assets, according to ETFGI data.
However, Fuhr noted some challenges she has seen in the crypto ETF space.
“I think the real challenge is going to be, to-date, it is highly unusual to see any of the model portfolios have allocations to any crypto,” Fuhr explained. “We also know that many of the platforms, wirehouses, etc, have still limitations on being able to allow the use of crypto.”
Despite the record launches, the industry also saw 347 closures from 117 providers across 24 exchanges, highlighting the competitive nature of the ETF space.
“ETFs do not sell themselves. You cannot rely on APs [authorized participants] and market makers to sell them,” Fuhr said, emphasizing the importance of a well-thought-out strategy for new ETF launches. “You basically have to have a very well thought-out sales and marketing plan if you’re going to launch products.”
The global ETF industry reached a record $13.9 trillion in assets at the end of August, with 12,677 products from 744 providers listed on 81 exchanges in 63 countries, according to the ETFGI report.
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