New analysis from SPDR ETFs, the exchange-traded fund division of State Street Global Advisors (SSGA), reveals there has been a fivefold increase in assets invested in globally-listed sector ETFs since 2008, reaching $394 billion in AUM by the end of 2016.
Antoine Lesné, head of SPDR ETF strategy & research EMEA.
The US experienced the strongest growth with a 548% increase in sector ETF assets since 2008, including $30bn inflows in 2016. Europe was a close second with a 487% increase in sector ETF assets over the same period, including $3bn net inflows in 2016.
Antoine Lesné, head of SPDR ETF strategy and research, EMEA, commented: “Sector ETFS have seen a marked increase in popularity amongst investors likely due to their potential for a more targeted exposure than growth and style investing, while maintaining cost-efficiency. By investing in an entire sector, investors gain greater diversity, reducing single stock risk, whilst achieving a much wider dispersion return than style indices.
“A sector rotation strategy allows investors the potential benefit from more predictable economic trends likely to impact on certain industries. With the rest of the year punctuated with political events and the macro economic backdrop shifting, the popularity of sector investing is highly likely to continue on its current trajectory for the foreseeable future.”
Since 2008, the top three equity sector ETFs for investors globally have been technology, which has seen a tenfold increase in total AUM, followed by real estate and energy, which have seen a 919% and a 599% increase in total AUM respectively.
In Europe over the last nine years, real estate has ranked the most popular equity sector, experiencing more than a tenfold increase in real estate ETF assets. The rest of the world saw real estate ETF AUM increase from $0.4bn in 2008 to $9bn in March 2017.
In the US, technology proved the most popular sector ETF with a more than tenfold increase in ETF assets between 2008 and 2016, although total flows were down $1bn over the course of last year.
SPDR offers a range of European, US and global sector ETFs.