Lorne Baring at B Capital discusses his view of ETFs
Lorne Baring, managing director and founder of B Capital, has shared his views on ETFs, and how he is using these on behalf of clients.
A snapshot of the ETF and ETP market
– The ETF and ETP market grew to over $1.6trn in AUM’s in 2011.
– The market has grown by fifteen times its size in 2001, with the fastest growth in the last five years.
– There were 219 ETF/ETP’s in 2001 whist there are now 3,987 ETF/ETP’s registered.
– In the ETF market, the top five providers globally have 80% share of the market.
– The largest ETF provider is iShares with $621bn out of a total ETF market worth $1.44trn.
– Hedge funds are one of the fastest growing institutional users of ETF’s and ETP’s.
– Strategies can be implemented with ETF’s in core/satellite applications or to gain passive market exposure while active selection provides manager tilting.
– A few considerations for ETF investors are that they need to employ an investment filtering process to identify possible risks to their strategy such as ETF Total Expense Ratio (TER) comparison, daily liquidity, issuer, physical replication or synthetic, underlying diversification. And in addition, there is the difference in ETF trading hours compared to underlying asset trading hours
Source: B Capital