etf assets rise threat of esma legislation looms

ETF assets under management conitnue to rise though ESMA and EC publications hint at increased product legislation to come.

etf assets rise threat of esma legislation looms


The grand total of ETF assets globally, according to independent analysts ETFGI, grew to $1.54trn, up by a little over 2% since June, with its year-to-date figure up 13.9% compared to 2011.

In Europe, according to Lyxor, part of the Société Générale group, assets under management rose to a record level of $255bn at the end of July partly, it says, due to market moves on the hopes of a Eurozone recovery.  With this in mind, German equity ETFs saw €10m of outflows in July, contributing to €630m so far this year. Global emerging market ETFs also saw outflows, for the third consecutive month, totalling €600m.

The legislation referred to above is a combination of publications from the European Securities and Markets Authority (‘Guidelines on ETFs and other Ucits issues’) and ‘Ucits – product rules, liquidity management, depositary, money market funds, long-term investments’ from the European Commission.

According to ETFGI, the latter “will inform the Commission’s future policy with respect to asset management for all Ucits funds and the areas where it seeks deeper understanding suggest legislation ultimately flowing from the discussion could be far-reaching.”

The guidelines it describes as an ‘evolution’ rather than a ‘radical change’ in how they treat ETFs.

While these two publications are still being debated, it is too early for them to have a meaningful impact on ETF flows though it will be interesting to see how they compare once the rhetoric changes into hard rules and regulations.

In the meantime, new ETFs and ETPs continue to be launched (22 ETFs in July, from 14 providers on seven exchanges globally; 37 new ETFs/ETPs form 17 providers on nine exchanges in July).