Latest figures show that global ETF assets stood at $10.364 trillion on 15th June, beating the previous peak of $10.262 trillion at the end of 2021. The figures, compiled by consultancy firm ETFGI, show ETFs have recovered from the market turmoil caused by a combination of Russia’s invasion of Ukraine, increasing interest rates and heightened inflation ahead of benchmarks such as the S&P500 which was still c.7% below its peak, also reached at the end of 2021, in mid-June.

The growth in global ETF assets is underpinned by both a recovery in equity prices as well as strong net inflows according to ETFGI founder Deborah Fuhr. Year to end of May figures show inflows of $154.34 billion in the US, the fourth highest on record for this period, while in Europe the figure is $61.89 billion, the third highest on record.

Speaking with Finance Dublin Lisa Kealy, partner and EY’s EMEIA ETF leader said, ‘The first 6 months in 2023 continued where 2022 left off, with heightened market volatility, as we have had to contend with a banking crisis, interest rate hikes, interest rate hike pauses and inflation that refuses to budge. Within this environment, ETFs continue to gather assets and has climbed to $10.3trillion in mid-June 2023, past it’s peak last set in December 2021.

There are a number of factors that have contributed to this growth, she said: “the changing interest rate environment has brought fixed income ETFs back into vogue with strong inflows into these products. Broad market equity markets have all performed strongly in 2023 (e.g., S&P 500, Euro Stoxx 50 are all up 10+% year to date) and sustainable investing is to the fore in Europe, and the ETF industry has embraced this the transparency of ETFs really lending themselves to this.’

Looking ahead Kealy said ‘We expect to see the continued strength of the industry’s core products to act as a foundation of growth into the future, combined with the industry’s embrace of innovative products. Further opening up of distribution networks, and online channels encouraging retail adoption should also act as a catalyst for growth. Building on these factors we would expect the global ETF industry to have assets in excess of 20 trillion dollars before the end of the decade, doubling from where it is today.’ She added, ‘The European ETF market is mirroring that of the global industry, and Ireland is driving much of Europe’s activity, with 67% of the assets in European ETFs domiciled in Ireland. Ireland has built up decades-long credibility in ETFs with a strong regulatory framework in place and we expect this market to continue to accelerate and grow in Ireland.’