Global ETFs likely to overtake hedge funds

Added 13th May 2015

Global ETFs likely to overtake hedge funds

The London-based research and consultancy firm said the assets under management of global ETFs reached a new record of $2.926trn at the end of the first quarter. In comparison, the assets of the global hedge fund industry was $2.939trn.

Furthermore, the global ETF industry has been growing at a faster rate than the global hedge fund industry. 

The gap between the amount of assets held in the ETF industry versus the amount invested in hedge funds narrowed to $13bn at the end of the first quarter from $230bn at the end of 2013.

“Many investors have been disappointed with the performance of hedge funds over the past few years as the HFRI Fund Weighted Composite Index has delivered returns significantly below the returns of the S&P 500 Index, according to S&P Dow Jones,” the firm said.

During the first quarter ended in March, the HFRI Fund Weighted Composite Index rose 2.3%, which is only 1.3% higher than the 1% return of the S&P 500 Index.

Lower expenses charged by ETFs is another factor supporting the growth.

The average annual cost for ETFs is 31 basis points or less than one-third of a percent, while fees charged by the majority of hedge funds are 2% of assets and 20% of profits, according to the report.

During January-March, the net inflows into the 8,431 hedge funds globally were $18.2bn, while net inflows into the 5,669 ETFs/ETPs were $96bn.

A look at the relative growth in the AUM of global ETFs and hedge funds:

Growth in the AUM of global and Asian ETFs:




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