Popularity of ETFs continues to grow

The popularity of Exchange Traded Funds (ETFs) continued to grow in Q4 2009 as more investors capitalised on their simplicity, transparency and low cost.  As global ETF assets broke through the $1 trillion milestone at the end of last year, data from Barclays Stockbrokers revealed a 31% increase in assets invested in the final quarter of 2009, compared to the equivalent period in 2008.

ETF trading activity through Barclays Stockbrokers also increased in the fourth quarter of 2009, up 13% compared to the previous quarter, and up 14% when compared with the equivalent period in 2008.  October 2009 experienced the highest volume of trades for the whole year - up by over a quarter (27%) on the previous high of March.

Investors also displayed their ongoing interest in the FTSE 100 in the fourth quarter of 2009.  The iShares FTSE 100 continued to dominate trading, attracting 16% of all purchases and almost a quarter (23%) of all sales.  In addition the ETFS  FTSE 100 Super Short (x2) entered the top ten buys and sales table for the first time - attracting approximately 5% of both purchases and sales (see tables in notes to editors).  However, the increasing popularity of emerging markets was also sustained through to the end of the year as investors utilised ETFs to broaden their horizons.  Emerging markets ETFs account for 18% of purchases and 10% of sales, with a focus on Brazil and China (iShares MSCI Brazil, iShares FTSE/Xinhua China 25, iShares MSCI Emerging Markets).

Barbara-Ann King, Head of Investments, Barclays Stockbrokers, comments:  "2009 was a year of market volatility and financial upheaval, but we increasingly saw our clients capitalising on these market movements to generate returns. Popularity in ETFs has soared as investors increasingly accept them as effective and transparent instruments to gain access to a variety of underlying asset classes.

"It is no surprise to see the FTSE 100 iShare continue to dominate ETF buys in Q4 2009; our clients have consistently seen value in the UK market and are clearly comfortable in making investment decisions in this area.  However it is interesting to see emerging markets ETFs growing in popularity. As the emerging market story becomes increasingly mainstream, ETFs present an efficient low-cost way to gain exposure to what were previously difficult markets to access."