FUNDS GETTING MORE COMPLICATED
According to research into the US exchange traded fund (ETF) market from Morgan Stanley Smith Barney, new funds are increasing the complexity of the market. Funds replicating new or non-mainstream benchmarks are making it more important to properly differentiate between products, heightening the need for dedicated analysts. Some ETFs in the US now offer exposure to leveraged and inverse returns, as well as foreign exchange and commodities. Innovative approaches to stock selection and weighting are also becoming more common. Europe may well be following in that trend.
EMERGING MARKETS DRIVE GROWTH
Interest in emerging markets helped boost growth in exchange-traded products to 14 per cent in the third quarter, according to research from Deutsche Bank. Money surged into funds tracking emerging markets generally but also into funds tracking specific countries. As a result, total sales of exchange-traded products grew by $43bn globally in the last quarter. The same research suggests that commodities are now less popular then they were, however. Funds flowing into gold have stalled in both Europe and the US.
GERMAN INVESTORS TAKE NO RISKS
Analysis of take-up of short and leveraged ETFs suggests German investors properly understand the risks of the products they are buying. According to the study by Constance University of Applied Sciences, German investors tend to hold highly leveraged and inverse ETFs for shorter periods, and invest much more money in non-leveraged funds. The results also suggest that short ETFs were mostly bought to hedge against equities, strengthening the conclusion that investors are rational and risk averse.