Home > Our expertise > Indexing & ETFs > ETFs
ETFs
Introduction
Definition
ETFs, Exchange Traded Funds or index-tracker funds quoted on stock exchanges, combine the advantages of a security quoted on an organised market with that of traditional funds. They replicate the performance of a benchmark index, the objective of which is to generate a return identical to that of their index.
ETFs are UCITS III compliant funds: all Lyxor's ETF funds are UCITS III compliant and fall within the scope of regulations governing collective investments in transferable securities at the European level.
ETFs track the performance of a benchmark index (the ETF's benchmark) and replicate the performance of the benchmark as faithfully as possible.
ETFs are continuously quoted and traded during stock exchange working hours on the main stock markets throughout the world.
At the end of the day the concept is very simple. It provides an investment that replicates as faithfully as possible the performance of an index, and which can be traded under the best possible liquidity conditions (at known prices and at any time).
Private investors or professional investors, who are ETFs for?
ETFs are intended for professional investors (asset managers, institutional investors, pension funds, investment managers, etc) as well as for private investors, who want to combine the advantages of funds and quoted securities.
ETFs: the genesis of the success
The first ETF was created in 1993 in the USA, tracking the S&P 500 index. However, it took another 6 years before the ETF market started to interest investors seriously. Nevertheless, we had to wait until 1999 for these products to meet with the success that they deserved. They were initially intended for finance professionals, but the ETF market gradually opened up to all types of investor.
From 2009, ETF assets under management in the USA stood at 1,000 billion dollars. Volumes traded every day exceed $50 billion. The SPDR S&P 500 ETF is currently the most traded security in the world with over $75 billion in assets under management.
ETFs were introduced onto the European market in 2001. Since then, the range of ETFs on offer has gradually expanded, and now stands at 961 ETFs. 35 investment management companies operate on the European ETF market. The market is continuing to attract ever more players. However, in 2010, almost 76% of the market was held by 3 issuers. At the end of September 2010, assets under management stood at €175 billion, an increase of 10% by comparison to December 2009.
Lyxor ETF has consolidated its position as a key player on the ETF market, and has been respected by the whole market since 2001. Lyxor ETF is the fifth largest supplier of ETFs in the world, the second largest in Europe, with a 15% share of the market and almost €28.5 billion in assets under management.
A strong presence on the European market: Lyxor ETF operates in 14 countries in Europe, Asia and Latin America. Its products are quoted on 13 financial markets and also on the Chi-X trading platform.
Steeply increasing volumes: Lyxor ETF has posted rises of almost 40% on all its volumes since the start of 2010. In the equity indices section, Lyxor has become the top European issuer in terms of volumes traded on equity ETFs, with a 33.4% market share.
A unique open multi-broker/dealer model: Lyxor ETF currently has a network of 40 Authorized Participants guaranteeing liquidity for its funds while keeping bid-offer spreads down. Thanks to robust partnerships and the excellent relations that Lyxor has built with brokers and dealers, Lyxor’s ETFs are amongst the most liquid and most traded in Europe.
