ETFGI reports asset growth and net inflows in global ETFs ETPs industry continues to outpace global Hedge Fund industry in Q4 2018

The Global Hedge Fund industry saw assets fall to US$3.11 trillion, with net outflows of US$22.5 billion during the quarter, according to ETFGI’s Q4 2018 Global ETF and ETP industry landscape insights report, an annual paid-for research subscription service.  (All dollar values in USD unless otherwise noted.)

Highlights

Asset growth of global ETF/ETP industry continues to outpace global Hedge Fund industry.

$4.82 trillion invested in 7,620 ETFs/ETPs listed globally at end of 2018.

$3.11 trillion invested in 8,311 Hedge Funds listed globally at end of 2018.

According to analysis by ETFGI, $4.82 Tn was invested in 7,620 ETFs/ETPs listed globally at the end of 2018, representing growth in assets of -0.49% over the year, impacted by sharp declines in the major indices during the last quarter.

During 2018, assets invested in Hedge Funds globally fell by 3.24% to $3.11 Tn in 8,311 hedge funds, according to a report by Hedge Fund Research.

Comparatively, assets invested in ETFs/ETPs had increased 36.23%, from $3.55 Tn to $4.84 Tn in 2017. Over the same period, assets invested in the Global hedge fund industry increased 6.37%, from $3.02 Tn to $3.22 Tn.

The HFRI Fund weighted composite index returned -5.76% in Q4 compared to -13.52% of the S&P 500 index (w/dividends), as many Hedge Funds strategies positioned for a market correction finally came to fruition.

Despite this, investors still ploughed money into passive funds, with ETFs/ETPs attracting $164.84 Bn in Q4, while withdrawing $22.5 Bn from Hedge Funds.

Assets invested in the global ETF/ETP industry first surpassed those invested in the hedge fund industry at the end of Q2 2015, as ETFGI had forecasted.

Growth in assets in the ETF/ETP industry has outpaced growth in the hedge fund industry since the financial crisis in 2008.

In 2018 the return of the S&P 500 Index was marginally better than the performance of the HFRI Fund weighted Composite index: -4.39% vs. -4.49%, respectively.

Returns of the HFRI Fund Weighted Composite Index and the S&P 500 Index

Sources: Hedge Fund Research HFR, S&P Dow Jones Indices

During 2018, ETFs/ETPs listed globally gathered $516 Bn in net inflows, according to ETFGI’s Global ETF and ETP industry insight report. December 2018 also marked the 59th consecutive month of net inflows into ETFs/ETPs. Over the same period, HFR reported net outflows of $33.5 Bn from Hedge Funds. Assets invested in the global ETF/ETP industry continue to grow, extending their lead over assets invested in the global hedge fund industry, the gap widening by 5.30%, from $1.62 Tn at the end of 2017 to $1.71 Tn.

The top 20 ETFs by net new assets in 2018, collectively gathered $206 Bn. The TOPIX Exchange Traded Fund (1306 JP) alone accounted for net inflows of $22.29 Bn over the period.

Top 20 ETFs by net new assets 2018: Global

Similarly, the top 10 ETPs by net new assets collectively gathered $9.99 Bn by the end of 2018.

Top 10 ETPs by net new assets 2018: Global