Exchange Traded Products Record $358bn Net Flows Globally

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The chief executive officer of Nigerian Stock Exchange (NSE), Mr. Oscar Onyema said the Exchange Traded Products (ETPs) globally has recorded $385 billion net flows as at October 2018.

As he called on the ETP product issuers and intermediaries to expand their footprint on the NSE by broadening distribution channels, introducing other asset classes/strategies, entering new markets, leveraging technology and data analytics to understand the market and demand.

Onyema in his address at the 2018 Exchange Traded Products Conference tagged “Exchange Traded Products: Evolving investment themes, Accessing New Markets and Enhancing Portfolio Alpha” held in Lagos, yesterday said that “the Global ETP industry had close to 15,000 ETPs listings on 71 exchanges with assets of about $5 trillion cutting across 392 providers at the end of October 2018.”

He noted that ETPs are one of the most significant financial innovations in recent decades and have shaped the financial markets.

“Since the introduction of ETPs in 1993, they have gained widespread acceptance in most developed markets. Over the last 15 years, investors’ demand for ETPs both retail and institutional has grown remarkably, which in turn has led to a greater variety of products offered by ETP sponsors,” he added.

He disclosed that equity-based ETPs make up 76.7 percent of global ETP listings whilst Fixed Income based ETPs represent 16.7 percent of listings, similar to the asset split in Nigeria.

“The cross-listing of ABSA’s Newgold ETF on the NSE in December 2011, opened up the ETPs market. Since then, the ETPs space has grown steadily by a cumulative average growth rate of eight percent over the last four years,” the NSE CEO affirmed.

Onyema disclosed that currently, there are nine ETPs listed on the Exchange, two thematic ETFs providing access to Pension-compliant and Shariah-compliant stocks, two broad equity market ETFs tracking the NSE 30 Index, three sector based ETFs, one commodity ETF, and one bond ETF tracking exposure to benchmark FGN Sovereign Bonds.
He further affirmed that the introduction of ETPs is one of the Exchange’s strategy to enhance diversification as well as broaden the options available in the capital market to support the efficient implementation of investment strategies across diverse asset classes and instruments.

He said the conference is aimed at expanding the discourse on ETPs in terms of enhancing domestic capacity as well as improving collaboration amongst participants in the ecosystem, product strategists, issuers, intermediaries, advisers, investment managers and investors.

“This conference is aimed at providing insights on emerging themes as well as foster understanding of ETPs as convenient vehicles and investment management tools for accessing other markets,” the NSE CEO said.

According to Onyema, the conference is expected to provide in-depth coverage of the various benefits of ETPs as well as address trends in the global and domestic ETPs space in terms of adoption, disruption and evolving investment strategies.

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