Markets are always changing and adapting along with the evolving supply and demand trends within the global marketplace. Investors and institutions make decisions predicated upon their expectation of future return sources, the risk associated with seeking those returns, and then also the emotions that hound them from the market history they have logged within their memory banks. Just as their investment preferences are collectively changing over time, so too is their partiality toward the delivery system for those investments. Over the past 20 years the exchange traded fund (ETF) has steadily increased its market share as the product has gained credibility and increased access for market participants to various asset classes and return factors. In 2013 the US ETF market grew in total assets, doing so through nearly $200 billion in net inflows, and also market appreciation, which amounted to growth of more than 20% compared to 2012 AUM levels. When the dust settled on 2013, total assets in US-listed ETFs stood at $1.7 trillion, nearly $300 billion above 2012 levels.
Today there are well over 1,500 exchange traded products in the US, a number that continues to grow, though at a far more measured pace in the past two years. Some new funds hit the ground running each year, and just as many fail to resonate with investors, which is a natural discovery process for a maturing industry. Still, many existing ETFs continue to attract new assets, with perhaps no better example available than the S&P 500 SPDRs [ SPY ]. Here are a few facts and figures regarding the state of the ETF industry and how it’s grown of late.
ETF Facts and Figures A decade ago the entire ETF industry encompassed assets of $150 billion, while today shares of SPY alone have grown to $175 billion . The SPDR S&P 500 Fund [ SPY ] represents 10% of all assets in ETFs , and the 2nd largest ETF today (the iShares S&P 500 Fund [ IVV ]) tracks the very same index. While there are 1,544 US-listed ETFs, 211 funds (14%) currently have assets exceeding $1 billion, and 788 funds (51%) have less than $100 million in AUM . That universe of 211 ETFs with at least $1 billion in AUM accounts for 88% of all assets in ETFs , while the 788 smallest ETFs account for just 1% of total AUM. Blackrock (iShares) remains the largest ETF provider by a relatively wide margin, accounting for 39% of ETF assets. State Street and Vanguard combine to make up another 43% of the asset base. The fastest-growing of the 10 largest ETF providers last year (cash flow / AUM) was First Trust , which attracted $8 billion in new cash flow, which represented 41% asset growth in itself, and WisdomTree was a close second. (source: IndexUniverse ). ETFs from every major asset class experienced cumulative positive cash flow last year, with the exception of the Commodity asset class, which lost $30 billion (48% of current AUM) .