ETFs

Standout Trends In ETF Issuer Growth

Cinthia Murphy, Managing Editor, ETF.com

It’s always a fun exercise to measure ETF market growth at the end of a calendar year. We are not quite on the eve of 2020, but net asset creations, market performance and ETF issuer growth all show some interesting trends so far this year.

For starters, for all of the concerns about a slowing global economy, trade wars, chances of a recession in the U.S. and geopolitical risks aplenty, U.S.-listed ETF assets have continued to grow in 2019, rising about 23% from year-end 2018 levels. Roughly $4.2 trillion is invested in U.S.-listed ETFs today.

That pace of growth—a combination of net creations and market performance—has been steadily strong for several years, but it hasn’t been evenly distributed among ETF issuers.

Consider that three issuers—BlackRock, Vanguard and State Street Global Advisors—command about 85% of all ETF assets. BlackRock’s iShares family of ETFs alone represents about $1.64 trillion of all assets tied to U.S.-listed ETFs, or a third the entire ETF market.

On the other end of the spectrum, about two-thirds of the 120 ETF issuers on the market today each manage under $1 billion. That disparity isn’t news. And it also doesn’t seem to be going away.

Still, the numbers this year show that among top three providers, in 2019, Vanguard led with percentage growth. The firm’s family of ultra-low-cost ETFs saw assets grow about 28% this year versus 23% for BlackRock and 19% for State Street.

Also noteworthy this year is that, even though these top firms’ dominance isn’t challenged, there are firms quickly growing their footprint in the ETF space.

Among them, big asset managers like J.P. Morgan and Goldman Sachs are now the Nos. 10 and 12 biggest ETF providers in the country, respectively. These companies have seen their asset base grow roughly 50-60% year to date thanks to attractive product offerings and massive in-house client assets.

Much smaller ETF players like Legg MasonGraniteSharesAmplify and ARK have practically doubled their ETF assets this year. Innovator Capital Management has practically grown threefold to more than $2.1 billion in total assets in just over a year.

These companies are behind interesting—sometimes first-of-a-kind—funds that fill investor demand for specific access, such as the online retail-focused Amplify Online Retail ETF (IBUY); the GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF (COMB); the ESG-focused ClearBridge Large Cap Growth ESG ETF (LRGE) and the ARK Innovation ETF (ARKK), which is now a $1.7 billion ETF.

The Innovator lineup of Buffer ETFs—first introduced in the summer of 2018 with the launch of the Innovator S&P 500 Buffer ETF – July (BJULand an entire family of funds that have since followed—has found immediate traction as investors looked for ways to remain invested but protected in the event of a downturn.

With all the competition for shelf space among 2,200-plus U.S.-listed ETFs, these smaller—and quickly growing—issuers show there is still room for great new investment ideas, packaged in easy-to-implement ETFs for a great price.

You can see ETF.com’s latest ETF Issuer League Table here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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