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ETF turnover surges

Exchange-traded funds are on the rise outside Americas.

February 23, 2012

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story_images_roller-coasterETFs are already a huge presence on stock exchanges in the U.S. and Canada, but according to this report from The World Federation of Exchanges, they are also surging in other markets.

The WFE is a trade association comprised of 54 publicly regulated stock, futures, and options exchanges around the world. According to their report on 2011 market highlights which was released in January, ETF listings in the Americas grew 24% up to 2,269 in 2011 from 1,806 in 2010.

But perhaps most interesting in the WFE report is growth in turnover, aka the rate at which a particular stock or ETF changes hands.

In the U.S. turnover in ETFs grew 4.8% in 2011, from $8.6 trillion to $9 trillion. That represents 87% of global turnover value in the ETF space.

More interesting is the fact that, in the Asia Pacific region, turnover jumped 27.4% from $263 billion in 2010 to $335 billion in 2011. And in Europe, Africa and the Middle East turnover was even higher, increasing by 32.3% up to $996 billion last year from $753 billion in 2010.

As different market regions report higher turnover in the ETF space, it's a sign that the products remained very liquid, as investors scrambled to respond to the market volatility that dominated last year.

As the WFE noted in its report, derivatives volumes also surged in 2011 as investors sought to hedge their portfolios during a tough year. The jump in turnover for ETFs, according to the WFE, could show that investors in different regions are showing their preferences for indices and ETFs over single stocks.

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