Earlier this week, we reported the big winners and losers in
May, and while the core shift in ETF investor psychology we
documented is interesting, I can't help but be fascinated by the
shifting sands of the industry's league table.
First, to sum up:Total assets in U.S. ETFs closed out May at
$798 billion, down from nearly $850 billion when we reported the
April numbers. The overall decline isn't a surprise, given that the
S&P 500 fell almost 8 percent in May, and foreign assets,
marked by the MSCI EAFE Index, declined more than 11 percent.
What's somewhat surprising is that even in the midst of the
bloodbath, ETF net inflows were a healthy $6.3 billion, even if
that's less than half of April's $12.7.
Part of the reason for the positive numbers is that ETFs are
increasingly being seen not just as speculative vehicles, but as
parking places for safe-haven money, as witnessed by the top-10
asset-gathering performance of short-term Treasury bills, gold and
Pimco's Enhanced Short Maturity Strategy ETF (NYSEArca:MINT).
MINT is where the story gets interesting, because it's a product
I was openly skeptical about. After all, MINT's about as close to a
traditional money market fund as you can get right now in the ETF
world. It's got a 30-day SEC yield of 54 basis points, and a 35
basis point management fee. What's more, you have to pay a
commission to get in and out of it. When it launched, I was on
record as saying I didn't get it.
Boy was I wrong. With almost $800 million in assets, there's
clearly a market for a traded cash-equivalent vehicle, even if the
yield on your margin account balance might be almost as good. And
the rise of MINT puts Pimco into the $1 billion club in ETFs-a
magical stratosphere where ETF companies start actually making
money. Here's the league table for May:
May 2010 League Table
The $1 Billion Club ($, mm)
AUM at 5/31/2010
|US Commodities Funds
What's notable to me is that the up-and-comer-such as Schwab,
Pimco, US Commodity Funds, Direxion and Van Eck-all continue to
pile on assets, while the five biggest players trade assets back
and forth between huge trading vehicles like the SPDR S&P 500
(NYSEArca:SPY) and the PowerShares QQQ (NYSEArca:QQQQ).
What these rising stars all have in common is innovation in a
market so many think is stagnant.
Direxion came out with "me too" leveraged products, but
accurately believed there was room for an even more highly
leveraged product than was previously available. Van Eck continues
to roll out innovative commodities-equity strategies, seemingly
just as the market wants them. Pimco proved me wrong. ETF
Securities and US Commodities funds prove again and again that
there's a market for different slices and dices of the commodities
space, whether it's clever tax management strategies like the
recently filed ETF Securities collateralized products, or the USCF
Brent Crude ETF (NYSEArca:BNO).
I think the message to the big boys in all this is clear:Stay on
your toes. Just because there aren't any obvious ideas left doesn't
mean someone else can't poach your investors with a better
mousetrap. After all, those mousetraps are just a mouse-click
Don't forget to check IndexUniverse.com's ETF Data
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