US, UK, and Switzerland dominate global ETF exposure with over 2,900 funds
A new survey of ETFs from Finbold reveals that, although the ETF market is growing as a critical investment vehicle, many funds are concentrated in a few countries. Several factors are propelling these countries to account for the highest number of ETFs, Finbold says.
According to data acquired by Finbold, the US has the highest number of ETFs as of August 16, 2021, at 1,243. The UK ranks second at 1,010, followed by Switzerland at 650. Cumulatively, the three countries account for 2,903 ETFs or 45.4 per cent of the total ETFs by the top 10 countries. Interestingly, China's ETFs count is almost half of the US funds at 555, followed by Ireland at 543 in the fifth spot.
Other countries with a significant number of ETFs include Canada (533), Germany (533), Netherlands (516), France (420), and Japan (382).
The report highlights why a select few countries are dominating the ETF market. The authors say: “Furthermore, the high number of ETFs in countries like the US results from the government's reaction to the coronavirus pandemic. The Federal Reserve opted for fixed-income ETFs to strengthen the bond market, a move that has acted as a significant catalyst for the sector growth from new players to investors.”
The country's dominance of ETFs correlates with a period in which the sector also recorded an influx of investors and different products. The report notes that the number of ETFs globally surged 133.42 per cent between 2016 and 2020, from 4,866 to 7,602. Therefore, the number of ETFs by the top countries accounts for 83 per cent of the global ETF count.
Consequently, the number of assets under management by the ETFs during the same period also surged to 56.22 per cent, from USD3.4 trillion to USD7.9 trillion, Finbold says.
The growth is guided by factors such as transparency in the ETF market alongside the low risk of investment feature, Finbold says.