Global professional services firm PwC expects accelerated growth in exchange-traded funds (ETFs) over the next five years, with global assets under management (AUM) anticipated to exceed $7 trillion by 2021. A new report, ‘ETFs: A roadmap to growth’ predicts the market will achieve further significant growth through entering new markets, expanding distribution channels and asset classes. The firm expects the North American ETF market to grow to $5.9 trillion in AUM by 2021 (a 23% cumulative annual growth); the European market to grow 27% annually – reaching $1.6 trillion AUM by 2021; and the Asian ETF industry to reach $560 billion in AUM by 2021 – an 18% annual growth rate over five years.

June inflows to global ETPs were the second best this year with investors putting their money into equities and gold as, despite Brexit, risk sentiment appeared to return, according BlackRock’s latest Global ETP Landscape Report. Global ETP flows hit $24.5bn last month, while April saw $11.1bn flow in and May had $10.7bn. Gold ETPs benefitted off the back of the EU Referendum as investors poured $2.5bn of assets into gold exposures pushing the June total to $5.4bn. Ursula Marchioni, Chief Strategist, iShares EMEA at BlackRock, said: “June flows have been mixed, demonstrating an absence of consensus amongst investors.”

By Giulio Castelli, Head of Product Development at STOXX.

Last year 196 countries agreed to limit global warming to less than two degrees at the United Nations Climate Change Summit in Paris. Though primarily a political signal, the agreement has increased pressure on companies along with investors. In order to keep to the two-degree-goal, greenhouse gas emissions need to be zeroed within the next 30 to 45 years. A major message of the climate change conference was that carbon emissions will no longer be economically justifiable in any business model in the not too distant future. Long-term investors in particular need to take notice of this.

Deutsche Asset Management has launched its fourth US-listed multi-factor ETF. The Deutsche X-trackers Russell 2000 Comprehensive Factor ETF (NYSE Arca: DESC) is a smart beta equities fund that favours companies within the Russell 2000 Index with strong exposure to targeted investment style factors: value, momentum, quality, low volatility and size. It tracks the Russell 2000 Comprehensive Factor Index and has a TER of 0.30%. Fiona Bassett, Head of Passive Strategy in the Americas, said: “Academic research has identified certain stock characteristics that are important in explaining a stock’s risk and performance. Emphasising these factors can potentially make a significant contribution to outperforming traditional market-capitalisation weighted benchmark indices.”

Global ETF provider iShares has expanded its suite of sustainable funds in the US with the launch of two new ETFs tracking Environment, Social & Governance (ESG) indices as investors look to enhance their portfolios with ESG exposures. The iShares MSCI EAFE ESG Select ETF tracks the MSCI EAFE ESG Select Index, providing access to large-and-mid-cap stocks in Europe, Asia and Australia, while the iShares MSCI EM ESG Select ETF tracks the MSCI EM ESG Select Index which includes large-and mid-cap emerging market stocks. Deborah Winshel, Managing Director and Global Head of BlackRock Impact, said: “Clients have repeatedly asked us for solutions to optimize their portfolios for ESG considerations.”

iShares has launched its Fallen Angels High Yield Corporate Bond UCITS ETF (WING) providing exposure to global bonds that were once rated investment grade and have since been downgraded to high yield status. The fund may provide a value opportunity to investors as the strategy seeks to take advantage of the price anomaly that can arise with a downgrade of these securities (the overly negative sentiment surrounding a downgrade into junk status, causes fallen angels to be regularly oversold prior to their downgrade). Listed on the LSE in US dollars and British pounds, and on the Deutsche Bourse in euros, the ETF has a TER of 0.50%.

Trading on electronic ETF platform Tradeweb soared on Friday 27th June following the ‘leave’ results of the EU Referendum as investors quickly cashed in on falling markets and bought safe haven assets in a bid to protect themselves from volatility. Adriano Pace, managing director, equity derivatives at Tradeweb, said: “Friday’s high trading volumes demonstrate the strength of the ETF market. It shows how good liquidity in ETFs can be maintained in times of market stress. This is the third proper test that we have had for ETFs on our platform in the last 12 months, and each time we have seen trading accelerate.”

Global index provider FTSE Russell has developed a new index series with the Namibian Stock Exchange. Due to launch tomorrow, there are 20 indexes on offer, which will be available as underlyings for index products, including exchange-traded funds. The Namibian-focused indexes have been calculated by FTSE Russell since 2002, but were previously part of the FTSE JSE Index Series. They have now been separated from this and will have their own Ground Rules. ‘Ground Rules’ describes the underlying universe from which constituents are chosen, their eligibility criteria and the frequency at which the composition of the indexes are reviewed.

Exchange traded funds are often touted by providers as being an ideal vehicle for short-term decisions and tactical investors due to their intraday liquidity, but a new study argues that ETFs are best held over the longer term. The June 2016 study from Vanguard, called “The Case for Low-Cost Index-Fund Investing”, said that time horizon is an especially important factor for investors who want to pay less in fees, see higher returns and favourably compare performance of passive versus active funds.

Newly formed exchange-traded fund issuer Strategy Shares, previously branded Huntington Strategy Shares (of US-based Huntington Bank), has launched its first two ETFs on the NYSE. The actively managed funds offer exposure to global environmentally-focused firms, and US-listed firms with a segment rotation overlay. Jerry Szilagyi, CEO of Strategy Shares, commented in a statement: “As we expand our portfolio of fund offerings, our focus will remain rooted in the brand’s core mission: to offer investors unique, alternative strategies that rely on the expertise of top-performing investment teams.”