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Another good year for ETF inflows, says Tradeweb

Thanks to their non-complex structure, transparency and low costs, exchange-traded funds have managed to weather the financial crisis and see their assets consistently grow year after year.

According to figures released by ETFGI, as at end of November 2013 global ETF assets reached USD2,211bn, USD457bn up from end of December 2012.
 
The US was the driving force behind this increase with USD365bn, while the European ETF market grew by a more modest USD57bn, data from ETFGI shows.
 
Fragmentation in on-exchange liquidity is the biggest challenge Europe needs to overcome before it can achieve its full potential. As at end of November 2013, there were 1,370 European ETFs spread across 5,005 listings and traded on 24 exchanges in multiple currencies. Accordingly, around two-thirds of the trading volume has been carried out over-the-counter, while, more recently, electronic multi-dealer trading venues have allowed investors to trade in size in a way that is recorded. This has helped to improve perceptions of liquidity and to boost confidence in the depth of the European ETF market.
 
Data derived from trading activity on the Tradeweb European-listed ETF platform shows some interesting trends for 2013, such as the impact of Ben Bernanke’s comments on May 22 about the potential tapering of the Fed’s stimulus efforts. “Sells” in fixed income went up to 22 per cent in the second quarter, compared to 15 per cent in the first and 12 per cent in the third quarter. In addition, we saw the proportion of volume in commodity ETFs decrease from 10 per cent in the first quarter to just four per cent in the last quarter of the year. 

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