Global market tumult slows growth in ETF industry

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The sharp reduction in risk-taking among investors adds a new dimension to competitive pressures across the industry after a decade when strong gains for equity markets turbocharged asset growth

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Deborah Fuhr, founder of ETFGI, says the “dismal performance by equity and bond markets in the first half of the year, the Russia-Ukraine war and China’s zero-COVID-19 policy” had also weighed on the ETF industry. The Vanguard Group Inc. holds a narrow lead over its arch-rival BlackRock Inc. at the midpoint of the 2022 race among ETF providers to drum up new business.

The slowdown has been more pronounced for State Street Global Advisors, the world’s third-largest ETF provider ranked by assets. ETF inflows for State Street dropped by 80 per cent to just US$8.8-billion. ETFs linked to defensive sectors – where earnings are considered less vulnerable to an economic slowdown or recession – registered positive inflows in the first half of the year. Health care sector ETFs gathered inflows of US$9.1-billion while consumer staples ETFs attracted inflows of US$5.6-billion, and utilities ETFs took in US$2.5-billion.

 

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