- Assets in U.S.-domiciled ETFs grew to $1.7 trillion as of year-end 2013. While the majority of assets continue to be invested in core U.S. and global equity as well as bond ETFs, investors are showing an interest in specialized strategies such as currency hedging.
- The success of DXJ (the WisdomTree Japan Hedged ETF) in 2013 was a significant development for the ETF industry. However, the rapid depreciation in the yen in 2013 may have magnified the benefits of currency hedging. While currency hedging is an important and legitimate strategy, a look at different timeframes and regions shows that the differences for an unhedged portfolio are usually less stark.
- 159 new ETFs launched in the U.S. in 2013, with increased activity in three areas: income or yield-oriented, short-duration fixed-income, and currency-hedged equity.
- ETF investors who took on equity risk in 2013 (particularly in U.S. small-cap ETFs, financial ETFs, and some country ETFs such as Japan) were rewarded. But looking at this performance without its corresponding risk would be a mistake, since many of these ETFs represent asset classes that have been volatile historically.
- Almost half the ETFs in the U.S. are still sub-scale, putting some at risk for shutdown.
ETF and ETP landscape snapshot
ETF assets in the U.S. grew to $1.7 trillion at the end of 2013. The table below provides a summary of the current ETF landscape, showing assets, the number of ETFs, and the expense ratio ranges by type of exposure. A complete updated list is available here.
Source: First Bridge
* Since “ETF” is a widely used acronym, we may use it to refer to all exchange-traded ’40 Act and ’33 Act instruments (including ETNs) that collectively fall into the “ETP” category.
** The Global Equities category includes both International (ex-U.S.) and Global (U.S. + International).