The global market for exchange traded funds and exchange traded products hit a record of $2.4 trillion at the end of last year, according to preliminary data.

The global market for exchange traded funds and exchange traded products hit a record of $2.4 trillion at the end of last year, according to preliminary data.

There were a total of 5,090 ETFs/ETPs, with 10,172 listings from 218 providers on 60 exchanges  at the end of December, ETFGI, a research firm that tracks this industry, said in a report yesterday.

ETFs are typically open-ended, index-based funds. They can be bought and sold like ordinary shares on a stock exchange and offer broad exposure across developed, emerging and frontier markets, equities, fixed income and commodities. Exchange Traded Products, meanwhile, are similar but do not use an open-end fund structure. The use of other structures including unsecured debt, grantor trusts, partnerships, and commodity pools by ETPs can, in addition to a significantly different risk profile, create different tax and regulatory implications for investors when compared to ETFs, which are funds.

“After spending most of 2013 wondering when and how the Fed would taper its QE scheme, investors felt a degree of positive cheer and certainty after the Fed announced in December that the US economy was strong enough for it to begin to taper by $10 billion in January 2014” according to Deborah Fuhr, managing partner at ETFGI and an authority on the market.

In December 2013, ETFs/ETPs saw net inflows of $24.5 billion. Equity ETFs/ETPs gathered the largest net inflows with $28.3 billion, followed by fixed income ETFs/ETPs with $403 million, while commodity ETFs/ETPs experienced net outflows of $5.0 billion.

In 2013, global ETF/ETP assets increased by 23 per cent based on positive market performance and net inflows of $242.8 billion.