Worldwide index assets managed in exchange-traded funds and exchange-traded notes totaled $6.51 trillion as of June 30, down 4.8% from $6.84 trillion a year earlier, according to Pensions & Investments' annual survey of index managers.
That decline was barely a nick compared with the drop in worldwide index assets overall, which fell 12.7% to $18.23 trillion as of June 30, P&I's survey showed. In fact, despite high inflation, central bank rate hikes, and stock and bond market losses, the overall global ETF industry in September saw its 40th straight month of net inflows and is on pace for calendar year net inflows second only to last year's $1.29 trillion record haul , according to London-based research and consultancy firm ETFGI LLP.
That index assets managed in ETFs declined less than index assets overall came as little surprise to Emily Foote McKinley, New York-based head of institutional specialists for ETFs and indexed strategies at Atlanta-based Invesco Ltd., who along with other ETF industry executives said ETFs have proven yet again to be a tool that institutional investors reach for in turbulent times. Invesco ranked fourth on the list of ETF/ETN index managers by worldwide assets according to P&I's survey, with assets of $383.5 billion as of June 30, down from $403.8 billion a year earlier.
"I think that we've always seen the biggest pickups in institutional usage of ETFs around and after times of severe market volatility," Ms. McKinley said, adding such periods — which in the past have included the global financial crisis and COVID-19-related market turmoil — spotlight ETFs' most institutionally relevant benefits.
That's because "the ETF wrapper is able to prove itself as a provider of liquidity and access and transparency to underlying markets in times of crisis," Ms. McKinley said.
During the first half of 2022 — a time frame when markets were contending with stressors including surging global inflation, Russia's invasion of Ukraine and the start of the Federal Reserve's aggressive rate-hiking campaign — the average daily total volume traded in Invesco's ETFs rose by 40% compared with the first half of 2021, she said.
"I'd say it's an indication both of current institutional usage, certainly, and then also I think it's an indication that we're just building future institutional viability," Ms. McKinley said, adding that as an ETF's trading volume increases, "it just becomes more viable for institutions to use."