Increase in institutional users of US-listed ETFs amid market turmoil

In the first nine months of 2008, 2,457 institutional investors across the world used one or more exchange-traded funds (ETFs) listed in the US, according to Barclays Global Investors' ETF Landscape Review. The US, UK, Canada, Spain and Switzerland have the most institutional users, constituting 89% of the overall total, with investment advisors forming the largest category of users at 72%. The SPDR S&P 500, iShares MSCI EAFE, iShares MSCI Emerging Markets and iShares Russell 2000 are the most widely held ETFs, says the report.

The increasing growth throughout last year has been fuelled by the market turmoil, which has highlighted issues concerning counterparty risk, transparency and liquidity. Consequently, the ability of ETFs to deliver efficient exposure to cash, fixed income, commodities and equity indexes has become more popular.

A rising number of investors utilise ETFs to help equitise cash, establish a core holding, implement tactical asset allocation, and easily gain exposure to a range of markets at real-time