According to a new report on the UK market by BlackRock’s global ETF research and implementation strategy team, the threat of the retail distribution review (RDR) had helped lift total AUM in ETFs to $93.4bn (£57.8bn) by the year end.

The report noted the increase in assets is considerably more than the 5.2 per cent increase in the FTSE 100 index in US dollar terms over the same period.

Deborah Fuhr, global head of ETF research and implementation strategy at BlackRock, said retail and institutional investors and advisers in the UK were increasingly embracing ETFs as a tool to use when implementing asset allocation.

She added that a key factor encouraging more advisers in the UK to embrace ETFs was the RDR, as the FSA had cited the vehicles as one of the packaged products that advisers should become educated on to recommend the products to their clients.

Ms Fuhr said: “ETFs are ‘RDR ready’ and fit into the new adviser charging model proposed by the FSA.”

“As such we have seen an increasing number of requests for information on ETFs that are both listed and registered for sale in the UK as well as having UK tax status, which can make them more efficient for UK domiciled investors.”

At the end of 2010, the report stated that the UK ETP industry had 764 unique products listed in the country, with 1,125 listings from 23 providers across three trading facilities – London Stock Exchange, Chi-X and Turquoise.

There were 520 ETPs with their primary listing in the UK, compared with 293 primary listings at the end of 2009, an increase of 77.5 per cent.

On asset allocation, Ms Fuhr added: “ETFs are gaining ground as an essential element of portfolios that are built around an asset allocation framework, without specific active investment decisions regarding security selection and market timing.

“With such portfolios becoming increasingly attractive, this particular application of ETFs will likely continue to expand.”