As market turbulence continues, investors are shunning complex or potentially costly vehicles such as structured products and preferring to hold relatively safe assets via exchange traded products instead, said Barclays Global Investors.

BGI, which operates the world’s largest ETF business via its iShares brand, said it is upbeat about the ETF market, citing statistics showing that while European mutual funds lost $505.8 billion in outflows during the first 10 months of this year, net sales of European-domiciled ETFs were $61.6 billion.

ETFs, which are listed and traded like stocks, can give investors exposure to different parts of stock, bond, commodity and sometimes hard-to-enter markets such as infrastructure without the investor having to own the underlying assets. Free of stamp duty tax in the UK and tradable online, ETFs have boomed as a market sector in recent years, having originated in the US in the early 1990s.

The BGI report said that UK regulatory proposals, the Retail Distribution Review, include measures to improve the standard of financial advice to protect consumers, and will encourage the use of ETFs, which typically carry much lower fees than many traditional funds.

At the end of November 2008 the ETFs industry had 1,539 such funds with 2,580 listings, assets of $633.83 billion, managed by 86 managers on 42 exchanges around the world.

ETF assets fell by 20.4 per cent since the start of 2008, which is less than the 43.80 per cent fall in the MSCI World index in dollar terms.