Assets invested in the global ETF/ETP industry will surpass those in the world’s hedge fund industry during the current quarter, according to a report from independent research and consultancy firm ETFGI.
The firm said that assets in the global exchange traded fund or exchange trade product (ETF/ETP) industry reached a record of $2.93 trillion at the end of the first quarter, while assets in the global hedge fund industry, according to a new report published by Hedge Fund Research (HFR), reached a record $2.94t, Portfolio reported.
However, it pointed out that inflows into the ETF/ETP industry have been significantly out pacing those invested in the hedge fund industry recently. ETFGI’s data showed that in the first quarter of 2015 net inflows into the 8,431 hedge funds globally were $18.2b, while net inflows into the 5,669 ETFs/ETPs were $96b.
“Many people will find it surprising that the global ETF/ETP industry, which just celebrated its 25th anniversary on March 9, has been growing at a faster rate than the global hedge fund industry, which has existed for 66 years,” ETFGI said.
One reason for this, it said, was disappointing performance of the hedge fund sector over the past few years.
In the first quarter of this year the HFRI Fund Weighted Composite Index, which reflects hedge fund industry performance, was up 2.3%, which was only 1.3% higher than the 1% return of the S&P 500 Index.
ETFGI said the HFRI Fund Weighted Composite Index, which tracks single manager funds and excludes fund of funds, has delivered returns below the returns of the S&P 500 Index over the past few years, according to S&P Dow Jones.
