Alternative Investments/Hedge Funds: ETFs’ AUM Continues To Trounce Hedge Funds (ETFGI)

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As at end of Q3 2020, ETFs AUM exceeded that of hedge funds by $3.58 trillion.

Hedge funds gathered net inflows of $13 billion during Q3 while ETFs/ETPs gathered net inflows of $194.4 billion, according to data from ETFGI. (Mondovisione)

ETFGI Highlights

  • While S&P500 with dividends has returned 5.37% YTD, the HFRI Fund Weighted Composite Index was up 0.64% during the period.
  • As of Q3 2020:
ETFGI # of Funds AUM ($T) Q-o-Q Growth %
ETFs/ETPs 8402 6.89 9.76
Hedge Funds 8019 3.31 4.2
  • Quarterly return during Q3 was 4.24% for the HFRI Fund Weighted Composite Index, while the S&P 500 with dividends earned 5.37%.
  • Assets invested in the global ETF/ETP industry first exceeded those invested in the hedge fund industry at the end of Q2 2015.
  • Growth in AUM in the ETF/ETP industry has surpassed growth in the hedge fund industry since the financial crisis in 2008, observes ETFGI
  • “The pressures on active fund managers to find ways to respond to the rise of ETFs have become irresistible,” said Deborah Fuhr, of ETFGI. “The growth of ETFs is a global tectonic shift that has gathered pace since the 2007/08 financial crisis.”
  • The Financial Times observed in a recent article: “Net flows into exchange-traded funds have jumped 40% so far this year with the growing shift into low-cost index-tracking vehicles forcing the pace of consolidation across the asset management industry to accelerate markedly. Morgan Stanley agreed last week to stump up $7 billion to acquire Eaton Vance while Franklin Templeton paid $6.5 billion to buy Legg Mason earlier this year, two deals that illustrate how traditional active managers are being compelled to reconfigure their businesses in response to ferocious competition from ETF providers.”

Related Story:    ETFs In The First Half of 2020                                              

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