The quoted funds, better known by their acronym in English (ETF, from exchange traded fund), are the latest shout in the investment industry. Although its market share is still small compared to more classic instruments such as funds, its growth is unstoppable. Globally, they have doubled in size in just five years to reach the 5.5 trillion dollars, according to ETFGI, a consultancy specialized in information about quoted products.
Experts attribute the take-off of this instrument invented just 3 decades ago to the specific attributes of the product, characterized by replicating an index (instead of selecting individually the assets that the manager considers have more potential). "The appetite for ETFs is based on their intrinsic cost efficiency and simplicity. They have lower commissions than most investment vehicles available in the market and give access to a diversified portfolio in a very simple way: a single transaction is sufficient to access a full basket of shares. In addition to this, ETFs are transparent vehicles, since they offer a clear investment objective, that of replicating the performance of an index, "explains Gaëtan Delculée, global commercial director of Amundi ETF, Indexing & Smart Beta.
Mariano Arenillas, head of DWS Iberia, agrees: «The main advantages are price efficiency, flexibility and liquidity». And the same thinks Pedro Coelho, director of UBS ETF for Iberia: "The ETF is the result of innovations that have occurred in the financial industry in the last 80 years and combines the advantages of different existing financial products."
Turning from active management
But, in addition, this takeoff has occurred coinciding with an increase in the disaffection of investors towards traditional funds due to the high commissions that are paid in pursuit of a pretended active management that, in some cases, has not been up to par. . This phenomenon has been particularly pronounced in the United States, where there has been a diversion of flows from active to passive management, so that the volume of ETFs in the country already reaches 3.5 billion dollars and a share of around 15%. Bryon Lake, head of JP Morgan's international ETF business outside the United States, believes there are three reasons for Europe's delay with the United States: First, "early adoption in the United States"; secondly, that "US regulation has favored passive investments" and, thirdly, that "the customer base is different, since retailers are more accustomed to building their own portfolios". In addition, Arenillas recalls that another reason is related to the size and composition of the American market itself: "The United States is a single market, while Europe has many markets," he says.
In any case, the experts are optimistic with Europe, where the ETFs represent some 800,000 million euros. "The European ETF market is more recent than the US market, but its high growth rate in the last 5 years demonstrates a strong appetite for investors. This is due both to the increase in education around these instruments and to the expansion of the range available in the market, both in equities and in fixed income. ETFs are beginning a new phase: the adoption of new retail customers and distributors, favored by Mifid, since ETFs perfectly meet the criteria of transparency and cost competitiveness, "says Delculée.
This specialist believes that this situation also applies to Spain: "Although ETFs have been adequately included in the asset allocation of institutional investors, they have not yet penetrated the retail market, which represents an important growth field for the coming years. . To reach these customers, Suppliers must collaborate with distributors to improve their product offerings and create specific educational contents ».