ETF Landscape: United Kingdom Industry Review - BlackRock ...

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ETF Landscape Year End 2010United Kingdom Industry Review from BlackRockTable of contentsCurrent ETF and ETP landscape in the United KingdomHighlights from 2010 .................................................................................................................................................................. 2Asset growth of ETFs/ETPs listed in the United Kingdom ............................................................................................................. 2Barclays Stockbrokers clients significantly increase investment in ETFs ....................................................................................... 4United Kingdom fund platforms ................................................................................................................................................... 4Top 10 ETFs/ETPs by assets, trading volume and flows ............................................................................................................... 5ETF/ETP providers with listings in the United Kingdom ................................................................................................................ 6Top five ETF/ETP providers by average daily US dollar turnover ................................................................................................... 6Top 25 brokers trading United Kingdom listed ETFs/ETPs ............................................................................................................ 7United Kingdom Distributor Status (UKDS) .................................................................................................................................. 8The new United Kingdom Reporting Funds (UKRF) system ........................................................................................................... 8United Kingdom Retail Distribution Review (RDR) ........................................................................................................................ 9Changes to the United States tax law may affect non- United States resident holders of United States ETFs ................................. 11Comparing ETFs and mutual funds .............................................................................................................................................. 13United Kingdom mutual fund industry .......................................................................................................................................... 13United Kingdom mutual fund flows .............................................................................................................................................. 14United Kingdom institutions reported holding ETFs ...................................................................................................................... 15ETF background .......................................................................................................................................................................... 16ETFs gain foothold in institutional market .................................................................................................................................... 17Investment applications ................................................................................................................................................................ 18Macro asset allocation and index performance ............................................................................................................................ 19Core/satellite applications ......................................................................................................................................................... 20How can ETFs be used and why use ETFs? .................................................................................................................................. 21The ETF toolbox .......................................................................................................................................................................... 24Commodity index comparison ..................................................................................................................................................... 29ETFs/ETPs listed in the United Kingdom, as at year end 2010 ................................................................................................... 35ETFs/ETPs listed in the United Kingdom in 2010 ........................................................................................................................ 58Subscribe to ETF Landscape reports ............................................................................................................................................ 63Global ETF Research and Implementation Strategy TeamDeborah FuhrManaging DirectorGlobal Head of ETF Research and Implementation Strategy+44 20 7668 4276deborah.fuhr@blackrock.comShane KellyVice PresidentGlobal ETF Research and Implementation Strategy+44 20 7668 8426shane.kelly@blackrock.comPublication date: 22 February 2011.This document is not an offer to buy or sell any security or to participate in any trading strategy. Please refer to important information and qualifications at the end of this material. 1
ETF Landscape Year End 2010United Kingdom Industry Review from BlackRockETF Landscape – United Kingdom Industry Review is BlackRock’s comprehensive market commentary, which covers ExchangeTraded Funds (ETFs) and Exchange Traded Products (ETPs) listed in the United Kingdom. ETFs are typically open-end index fundsthat provide daily portfolio transparency, are listed and traded on exchanges like stocks on a secondary basis as well as utilising aunique creation and redemption process for primary transactions. ETPs are products that have similarities to ETFs in the way theytrade and settle but they do not use a mutual fund structure. The use of other structures including grantor trusts, partnerships,notes and commodity pools by ETPs can create different tax and regulatory implications for investors when compared to ETFswhich are funds. This document includes rankings of ETF and ETP providers and ETFs/ETPs listed in the United Kingdom. Thiscommentary should not be regarded as a research report 1 .Current ETF and ETP landscape in the United KingdomHighlights from 2010:Assets increased 49.0% in 2010 in ETFs/ETPs with their primarylisting in the United Kingdom to US$93.4 Bn, which is more than the5.2% increase in the FTSE 100 Index in US dollar terms over thesame period.The number of ETFs/ETPs increased 77.5% in 2010, from 293primary listings in 2009 to 520 at year end 2010.11 new providers listed their first ETF/ETP in the UnitedKingdom in 2010.The average daily reported trading volume increased 24% inUS dollar terms in 2010 for all United Kingdom listed ETFs/ETPs toUS$550.4 Mn, compared to US$445.3 Mn at the end of 2009.Most ETF trades are not required to be reported in Europe as ETFsare not covered by the European Union Directive on Markets inFinancial Instruments (MiFID).The first ETF was listed on the London Stock Exchange’s MainMarket in April 2000, this was followed by steady growth in thenumber of funds listed but it was not until the abolition of stampduty on ETFs incorporated overseas in February 2007, that thisalready flourishing market transformed into a leading Europeancentre for ETFs.Figure 1: Asset growth of ETFs/ETPs listed in the United Kingdom, as at year end 2010Assets US$ Bn100# products1,200806040201,000800600400200002000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010# ETFs 2 3 4 5 11 25 42 85 118 144 204# ETF listings 2 5 6 8 14 29 68 158 269 386 672# ETPs - - - - 1 2 32 56 123 149 316# ETP listings - - - - 1 2 32 67 135 226 453Total # ETFs/ETPs 2 3 4 5 12 27 74 141 241 293 520Total # ETF/ETP listings 2 5 6 8 15 31 100 225 404 612 1,125ETF assets (US$ Mn) $213.8 $459.5 $658.2 $2,050.0 $3,140.8 $6,432.5 $14,404.4 $23,189.4 $27,155.9 $47,164.8 $66,713.1ETP assets (US$ Mn) $0.0 $0.0 $0.0 $0.0 $721.3 $1,102.3 $2,084.2 $4,919.8 $6,895.3 $15,507.5 $26,648.4Total (US$ Mn) $213.8 $459.5 $658.2 $2,050.0 $3,862.1 $7,534.8 $16,488.6 $28,109.2 $34,051.2 $62,672.3 $93,361.5Note: # ETFs/ETPs refers to primary listings only.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.1. Certain terms used in this publication may differ from those applied by other industry participants.2 This document is not an offer to buy or sell any security or to participate in any trading strategy. Please refer to important information and qualifications at the end of this material.
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