European ETF turnover rises by 120%

A European, industry-wide ETF trading report from iShares, the world's leading Exchange Traded Fund (ETF) provider, shows a 120% rise in European ETF turnover in the 12 months to 30 April 2009. As a proportion of total trading activity, ETFs have risen from 2.8% to 10.8%, during the same period, while trading volumes for underlying equities and futures have declined significantly.

Commenting on the data, Nizam Hamid, head of sales strategy, iShares Europe, said: "Our findings show ETFs now feature as a consistently higher proportion of total trading activity in Europe. This sustained growth in turnover against a backdrop of weak market conditions and generally lower trading levels in cash equities and futures shows a strong indication of investors' preference for ETFs."

'Trading European Exchange Traded Products' is the first in an innovative new monthly series of ETF trading reports and forms part of iShares' on-going education campaign. It provides detailed data relating to the main features that investors should consider when trading ETFs. iShares believes trading is an important part of assessing the total cost of ownership for different ETFs and it is important to track several variables. These include intraday spreads, how these compare with the underlying securities, on exchange and over the counter (OTC) levels of liquidity and how spreads in general have evolved as market conditions have changed.

"It's important to compare how the bid ask spread for an ETF measures up against the equivalent measurement for the underlying equities at an index level. For example, if you take the iShares FTSE 100, it has traded fairly consistently at a lower spread than the equities underlying the index. Of course, it can vary across different ETFs but is still an important cost factor for investors to consider."