ETFs became more popular in 2010, new analysis reveals

Barclays Stockbrokers clients significantly increase exposure to Exchange Traded Funds (ETFs) and managed funds last year, new figures show.

Number of client accounts holding ETFs in 2010 increased by 137% since 2008 and Funds dealing volumes were up a third from 2008, full year figures from the UK’s largest online execution only stockbroker reveal.

The report found that since 2008, the number of client accounts holding ETFs has increased by 137%, and by 42% compared to 2009. Analysis also found the average client trade size has increased by 28% since 2009, and that the volume of assets traded increased by over a third (36%).

In 2010, clients predominantly used ETFs to invest in UK market. For example, the FTSE 100 accounted for a quarter of all ETFs purchases last year However, the S&P 500 Index was also popular, demonstrating client appetite for investing in the US.

Emerging Markets-linked products also proved popular, with four featuring in the top ten ETF purchases for the year.  Clients consistently sought income through ETFs in 2010, with the iShares UK Dividend Plus and iShares £ Corporate Bond both in the top ten.

Growth was also strong in managed funds investments. 2010 data revealed that dealing volumes have increased by 38% since 2009, and by 33% compared to 2008. In addition, the volume of assets traded in 2010 increased by 40% from 2009.  Clear themes emerged in our clients' fund investment choices in 2010 and Emerging Markets, Asia Pacific and commodity funds were the most popular for the year.

‘It is encouraging to see the strong growth of both ETFs and managed funds. Two years on from when we first identified the increasing appeal of ETFs for retail clients, the level of take-up and interest in these investment products has been exceptional. Our clients have consistently viewed ETFs as effective and accessible investment vehicles and are increasingly using them to capture short-term market movements, as well as in longer term portfolio construction,’ said Paul Inkster, head of product at Barclays Stockbrokers.

‘The popularity of ETFs and funds continues to build among our clients and our figures suggest this growth shows little sign of abating. Although clients trade frequently in the main UK markets, especially with ETFs, there is a clear trend towards using both ETFs and managed funds to gain international exposure especially for emerging markets where information and research on individual companies can be less accessible. The growth of both products also indicates that our clients are using these as complementary products in their investment strategies,’ he added.