Even in a tough financial market, exchange-traded funds or ETFs are proving to be resilient. According to one estimate, global ETF assets reached $725 billion by end 2008. And at current growth rate, global ETF assets should be worth $1 trillion within two years.
ETFs have are favored by retail investors largely due to negligible entry and exit loads, low annual management fees and ease of use. Besides, they known for their liquidity and transparency. Specific asset classes can be easily targed though ETFs. Despite the current financial crisis, ETFs attracted $260 billion worldwide in inflows in 2008.
In the world's biggest ETF market, US, which is worth over $500 billion, investors are reported to have poured in $176 billion last year. Inflows increased by 29 percent in 2008 from the previous year. ETFs account for more than one third of the trading volume in US.
In Europe, net inflows into ETFs rose at a faster 57 percent to reach $74 billion last year. Total value of assets under management in Europe, in ETFs, surged to $145 billion in 2008 from $130 billion in 2007.
