Indexing and ETFs
Recent times have seen Exchange Traded Funds (ETFs) become the institutional investment tool of choice, often seen as a simple, low cost and flexible way to access the potential rewards of the market. They bring important advantages, in combining the ready-made diversification of index tracking with the ease and flexibility of trading shares. By the end of September 2010, there were over 2,300 ETFs with assets worth over 1 trillion USD, listed on 50 exchanges around the world.
As more companies launch ETFs, the market has become larger and more competitive. However, increased ETF players ensure innovation and healthy competition and also add credibility to the actual investment segment. Indices play a vital role in the creation of these successful ETFs. Generally, ETFs are created to sit on, or track an underlying index, which in many cases is already used as a recognised benchmark in some shape or form, allowing the ETF performance to mirror a broader stock universe. The index is of vital importance, both from the technical aspects of running the funds, as well as helping with market acceptance and understanding of the investment opportunity
As a global index provider, FTSE is no stranger to the ETF world and has had great success in the creation of tradable indices to support ETFs in many markets – Total ETF assets under management based on FTSE indices are in the region of USD 55 billion, with 170 indices tracking FTSE indices and traded on over 20 exchanges around the world.
FTSE is working closely with investment managers to meet a strong market demand for new and innovative indices to support ETFs across the asset classes, as well as for new approaches to equity investment. Over 30 ETF issuers have created products tracking equities, real estate, infrastructure, fixed income, responsible investment, investment strategies and Shariah-complaint securities using FTSE indices and ETF’s based on FTSE indices are available in both leveraged and short varieties.
Further Information
Press Releases
- 20 Sep 2010 - FTSE creates new index for State Street first greater China themed ETF
- 09 Jul 2010 - FTSE China 25 Index (previously named FTSE/Xinhua China 25 Index) to be used for basis of first China themed ETF listed in Malaysia
- 08 Mar 2010 - Hua An licenses the FTSE 100 for their first international ETF in China
- 02 Nov 2009 - FTSE licenses three benchmarks to Schwab for the creation of ETFs
- 29 Jul 2008 - Lyxor AM licensed to use FTSE Coast Kuwait 40 for first ever ETF on Gulf Region
- 17Jun 2008 - Deutsche Bank licensed to use FTSE 100 Short Index for ETF