The popularity of ETFs took off after the GFC of 2008 as investors were looking for cheaper ways to establish diversified portfolios compared to complicated investment products or costly active funds. US-based ETFs ballooned to more than US$4 trillion ($5.5 trillion) in AUM by end 2019 compared to US$770 billion in 2009. Globally, total ETF and ETP assets started the decade with more than US$6.35 trillion before increasing 31.9% in 2019, according to ETFGI’s report. The 10-year ETF/ETP CAGR was at 18.6%.
Passive investing has been on the rise in recent years. Among the means of passive investing, the most common method would be index investing where investors replicate and hold investments in broad market indexes or indices. However, manually investing into the various components of the index can be costly, time consuming, and complicated. Thus, investors may turn to Exchange Traded Funds (ETFs) and Exchange Traded Products (ETPs).
Scale of ETFs/ETPs
