ETFs have boomed in recent years, particularly as a result of a shift towards more “passive” forms of investing around the world.
Assets invested in the world’s exchange-traded funds sector stood
at $13.61 trillion at the end of July – a record – propelled by
equity market gains in that month and ahead of the market
pullback that hit just over a week ago.
These index-tracking funds, which have boomed in recent years
amid a shift towards more “passive” approaches to investing, drew
$216.64 billion in net new money during July, taking year-to-date
inflows to $947, according to ETFGI, an organisation tracking the
sector.
During July, equity indices rose, with notable gains in markets
such as Belgium, Greece and the UAE, the firm said.
ETFs, which are listed like stocks, give users the ability to
track an index or specific sector of equities, bonds, commodities
and other markets. The industry has surged over the past two
decades and more, driven by the desire to access markets in one
hit for a relatively low fee. A decade of low or even negative
interest rates after the global financial crash of 2008 lifted
equities across the board, denting the attractions of paying
higher fees for more actively managed traditional funds. The ETF
sector has changed – there are thematic ETFs, and those that seek
to capture drivers of return, such as “smart beta”
exchange-traded funds, among others.