Exchange-traded products, including exchange-traded funds and notes, had net inflows of more than $100 billion in the first 10 months of the year, and managers are still bullish on their growth prospects, according to an SEI survey.
Among the managers surveyed, 28% indicated that they do not currently offer exchange-traded products but were planning to launch them in the next 18 months. Of those, 90% said growth potential was an important market condition to decide to launch products, 40% said the products were consistent with the firm’s existing strategy and 30% said client demand spurred the launches.
Among the other respondents, 58% said they do not offer products and have no plans to do so, and 14% already sponsor products.
“We think ETFs are here to stay,” said Phil Masterson, managing director at SEI.
Also, 21% of respondents said legal and regulatory issues were the highest barrier to entering the market, 16% said the highest barrier was the ability to differentiate from already existing products, and 16% said infrastructure needs were the highest barrier.
Mr. Masterson said the lack of easily available seed capital given the recent credit crisis is also a significant deterrent and emphasized that firms that wanted to launch exchange-traded products needed to work with a partner that is “familiar with the business and knows the opportunities and challenges of launching” the products.
SEI surveyed 40 money management executives at firms with assets under management ranging from $250 million to more than $100 billion in early September. The full survey is available at http://www.seic.com/ims/ALookAhead.
