ETFs Report Robust Growth

EghtesadOnline: The value of exchange-traded funds rose more than six times over one year since the end of tenth calendar month last year (Jan. 20, 2019) up until the same month in 2020.

News ID: ۷۴۹۷۵۸

29 February 2020

The total value of ETFs rose from 115.09 trillion rials ($757 million) during the period to reach 752.95 trillion rials ($5 billion), Financial Tribune reported.

ETF value experienced a whopping 554% annual increase in value, according to data released by the Central Securities Depositary of Iran.

An ETF is a type of fund that owns underlying assets (shares, stocks, bonds, oil futures, gold bullion and foreign currency) and divides ownership of those assets into shares.

ETFs hold multiple underlying assets, rather than only one like a stock. An ETF can own hundreds or thousands of stocks across various industries, or it could be isolated to one particular industry or sector.

The number of ETFs operating in the domestic capital market increased to reach 44 by the end of the period under review.

While data indicates a burgeoning trend in the  ETFs, their growth has been rather insignificant compared to their international peers. A report by Tehran Stock Exchange recently said performance of the ETFs fell far short of expectations despite the fact that on the global and regional level they continue to expand in value and variety.

Data show that since inception in 1990, the value of ETF assets across continents reached $4 trillion by mid-2017 and exceeded $5 trillion by the end of January 2018.

The US had the biggest ETF market in the world, holding 71% of the total value of ETF assets followed by Europe and Japan with 17% and 6%, respectively.

ETFs are expected to expand further in light of new government divestiture schemes. Economic officials have announced new plans to divest government stakes in state-run companies via ETFs, after previous divesture attempts failed to deliver.

Accordingly, companies in which government share is below 50% are supposed to be sold via the ETFs.

The government has plans to divest its remaining shares in 18 companies, including in oil refineries, banks, and auto, insurance and metal companies, among other things.

Top Performers

CSDI singled out the top-performing ETFs during the month to Jan.20.

Arman Parand Mapna Project Fund was the largest ETFs with a total value of 139.06 trillion rials ($993.33 million).

Parand Paydar Sepehr Fund came in second with a total value of 90.81 trillion rials ($648.64 million). The newly added ETF, Bazre Omid Fund, was next and crossed 72.13 trillion rials ($515.25 million).

Amin Yekom Farda Fund and Kamand Fixed Income Investment Fund followed with 61 trillion rials ($435.72 million) and 60.54 trillion rials ($432.42 million), respectively.

Etemad Afarin Parsian Fund took sixth place with 42.04 trillion rials ($300.32 million).

This was followed by Arman Ati Kosar, Tose Andukhte Fund and Kian Fund.