Abstract
Research background: Exchange-traded products (ETPs) are one of the most rapidly growing categories of financial products. Their fast development has been boosted by innovative features. Three main categories of ETPs are exchange-traded funds (ETFs), exchange-traded commodities (ETCs) and exchange-traded notes (ETNs). ETCs and ETNs remain least known, even though their number on some stock exchanges is high. In Europe, Germany is one of the largest and most active ETPs markets. ETCs and ETNs are debt instruments, in contrast with the most popular ETFs, which are equity securities. Therefore, they offer investors different advantages, but also expose them to other types of risks.
 Purpose of the article: The key aim of the article is to present the features of ETPs and to provide in-depth insight into the issues linked with the development of ETPs market in Germany, with the special emphasis on the ETCs and ETNs.
 Methods: In the main empirical part of the article, German ETPs market is analyzed using descriptive statistics and technological substitution framework (employed for the analysis of innovations in order to evaluate the changing market shares of, first, ETFs versus ETCs and ETNs, as well as, second, ETFs versus other types of investment funds). The period of the analysis is 2010?2016 in the former case and 2007?2016 in the latter.
 Findings & Value added: Share of ETPs other than ETFs in the total market in Germany remains low. Even though the market position of the leading products, i.e. ETFs, is still very strong, some substitution has been observed, especially after 2015. Predictions indicate that this trend will continue in the upcoming years. The results of the analysis of the investment funds? market confirm the substitution between ETFs and traditional investment funds over 2007?2017, in particular in the first years of this time period.
Highlights
Exchange-traded products (ETPs) are one of the most rapidly growing categories of innovative financial products
Main part of the substitution analysis we investigate the substitution between older, equity products (ETFs) — the first category, and newer, debt products (ETNs and exchange-traded commodities (ETCs)) — the second category, which may be regarded as even more innovative and able to take over market shares of more established exchange-traded funds (ETFs)
In the last 10 years, between 2007 and 2016, assets under management of all globally listed ETPs have increased by ca. 314%, from 857 to 3546 bln USD (ETFGI, 2017, p. 4)
Summary
Exchange-traded products (ETPs) are one of the most rapidly growing categories of innovative financial products. ETCs and ETNs are debt instruments, in contrast with ETFs which are equity securities They have been in use for a much shorter period than ETFs — they may be regarded as innovation in relation to the previous innovation (ETFs) as they emerged as a new form of investing. The key purpose of the article is to present the most important features of three categories of ETPs and to provide the in-depth insight into the issues linked with the development of ETPs market in Germany, with the special emphasis on the role of ETCs and ETNs. development of the ETPs market Germany is studied in a slightly different perspective by analyzing the market share of the largest category of ETPs, i.e. ETFs, in the total market for investment funds in Germany.
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