ETFs Set To Outstrip Hedge Funds

Jan 7 2014 | 1:56am ET

The hedge fund industry is already much smaller than the mutual fund industry, and may soon by smaller than one small part of the mutual fund industry—if it isn't already.

Total investment in exchange-traded funds is set to surpass that in hedge funds this year. But one measure—BlackRock's—it already has. And ETFs are growing much faster than hedge funds, having seen their assets soar since 2008, while hedge funds have struggled to regain capital lost during the financial crisis.

"If the current trends continue, 2014 will herald a significant milestone for the ETF and hedge fund industries, as the total amount of capital invested in the former threatens to overtake the latter," S&P Dow Jones Indices' Tim Edwards said.

Hedge funds grew by 8% last year, according to Eurekahedge, and manage a total of more than US$2 trillion.

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