This is an almost 18% increase in trading volume for one of the fastest growing sectors in the global equity market, according to a Morgan Stanley market review. ETFs track indices of stocks, bonds, or other assets without requiring the investor to buy all index components. ETFs make up almost one fourth of the underlying trading volume in stocks on US exchanges, according to Reuters.
The US has the largest ETF market, with assets under management at $245 billion in 173 ETFs, compared with Europe at $40 billion in 139 ETFs and Japan with $29 billion in 15 ETFs. However, according to the Reuters report, Morgan Stanley says that the European ETF market grew the most (19.2%) in the first half of 2005. The US ETF market grew 7.8%, while Japan’s declined almost 2%.
There are 390 ETFs with 490 listings and assets of $336 billion, managed by 46 managers on 31 exchanges worldwide, according to Reuters. Deborah Fuhr, Morgan Stanley’s global ETF strategist, said portfolio managers are “embracing the use of ETFs to gain international market exposure.”
The largest ETF manager globally is Barclays Global Investors with almost $150 billion in assets, 44.6% of the market share. State Street comes in second with almost $80 billion in assets, or 23.8% of the market share.