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Women rise to the top in merit-driven ETF industry

By: Caroline O’Shaughnessy, Global Head of Sales & Marketing

On March 8th, women executives rang bells at over 30 exchanges globally to celebrate International Women’s Day. Organized by Women in ETFs, the event was executed in partnership with UN Global Compact, Sustainable Stock Exchanges Initiative, UN Women, IFC and The World Federation of Exchanges. While the event ostensibly was focused on celebrating gender equality, at FTSE Russell we’d also argue it accentuates the parallel growth of the ETF industry along with the rise of women to positions of leadership within this relatively new sector.

Of course, there is always more work to be done when promoting equality, but I feel the ETF industry is firmly ahead-of-the-curve. Through our own work and collaboration with partners, we see the global ETF space as a unique pocket that affords women greater opportunities than perhaps other segments of financial services. This has coincided with explosive growth for ETFs.

So are women the drivers of the industry’s growth or does the industry possess unique characteristics suited to women? Neither answer provides a completely satisfactory response, yet it is clear there is a  symbiotic relationship between the two.  

As a rapidly evolving and highly innovative space, the ETF industry has proved a rich source of new ideas and entrepreneurial energy. Women have had the unprecedented opportunity to shape the culture and develop the community. The ETF space has proven to be a meritocracy that rewards great ideas and hard work universally. There are less  restrictions hindering creativity or limiting opportunities for women and other groups. It is truly a global business, characterized by collaboration and a supreme focus on developing solutions that meet investors’ varied needs.

Consider the rapid growth and expansion of the industry. According to ETFGI, at the end of January 2016, the global ETF/ETP industry had 6,180 ETFs/ETPs, with 11,895 listings, assets of US$2,853 Bn, from 277 providers on 64 exchanges.

 

 

ETF adoption is clearly growing across regions and investor classes. The blistering pace of innovation, particularly on the index front, is a major driver behind this expansion.  A prime recent example is the development of smart beta and factor focused products. According to Morningstar, smart beta is growing faster than both the broader exchange traded product (ETP) market and the global asset management industry. From December 2012 to December 2015, worldwide “strategic” beta ETF assets more than doubled from $234 billion to $505 billion. And according to Morningstar Direct, “strategic” beta ETPs account for approximately 21 % of total equity ETP assets, and 26% in the US.

And the industry is becoming much more global as ETF demand increasingly spreads from the United States and North America to other continents. We see this firsthand through our work helping major North American asset managers expand to bring ETFs to Europe and Asia – each of which has its own challenges for investors and providers. Notably, what works in the U.S. and North America doesn’t necessarily work in Europe – or Asia. Different regulatory environments, cultural differences, market structure and investor preferences greatly impact how business is conducted and the types of products that can meet investors’ needs.

In Asia, the more nascent ETF industry is actually 10 individual markets that currently make up the region: China, Japan, Hong Kong, Korea, Malaysia, Taiwan, Vietnam, Singapore, Australia and New Zealand.  Client engagement processes that work in Singapore, for example, which is comprised mainly of the large global ETF providers, will not necessarily work in Taiwan or China, who favor more regional players and are more tightly controlled on the regulatory front.

All of this rapid expansion and the unique challenges of each new market will likely continue to create opportunities for smart, driven men and women to shine. The ETF industry globally needs builders, collaborators and innovators and as its short history has shown, its demand for innovative thinkers helps to level the playing field for all professionals. Today, we celebrate women in ETFs and  we celebrate the ETF industry and the opportunities it continues to bring for investors, our clients and for all of us professionals.

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