Articles for Financial Advisors

ETFs

ETFs

As of November 2012, the ETF marketplace was valued at $1.3 trillion (vs. $10 trillion invested in mutual funds). iShares (BlackRock) remains the largest player with 41% of the marketplace, down from 60% in 2007. Next to BlackRock, the next two largest ETF sponsors are State Street (25% market share) and Vanguard (18% market share). There are over 1,500 ETFs, and almost all of them are passively managed. Vanguard recently introduced an index ETF that mimics the iShares Barclays 0–5 Year TIPS ETF; the Vanguard offering has an annual expense ratio of just 0.1%. On January 2013, SPDR S&P 500 ($120 billion) will celebrate its 20th anniversary as the first ETF. Today, this ETF represents 9% of all EFT assets. 

 
The first bond ETF began operations 10 years ago. The total fixed-income portion of ETFs represents just 18% of the ETF marketplace. The most popular bond ETF is PIMCO’s BOND ETF ($3 billion), which mimics PIMCO’s $278 billion total return bond fund. The table below provides some ETF statistics.
 
 

ETF Statistics  [November 2012]

Biggest stock ETF (SPY)

SPDR S&P 500 ($120 billion)

Biggest bond ETF

iShares iBoxx $ Investment Grade Corp. ($25 billion)

Total stock assets

$900 billion

Total bond assets

$237 billion

Largest 1-day redemption

June 23, 2008 (92 million shares of SPY)

Most positions (2,953)

Vanguard Russell 3000 (VTHR)

Biggest commodity ETF

GLD (SPDR Gold Shares) $75 billion

Actively managed ETFs

55

Cheapest ETF

0.04% (SCHX) Schwab U.S. Large Cap

Sponsors

49

Total countries represented

97

Most countries represented

50 (ACWX) iShares MSCI ACWI ex-U.S.

 

Average Bid-Ask ETF Spreads  [September 2012]

U.S. Fixed Income

0.22%

U.S. Equity

0.25%

Foreign Equity

0.61%

Alternatives

0.65%

Commodities

0.79%

Asset Allocation

0.84%

Foreign Fixed Income

0.85%

Currency

1.06%

Inverse

1.65%

Leveraged

2.31%

Average of all categories

0.92%

 

source: Index Universe

 

Annualized Cost for ETF Investors

[September 2012]

Category

1-Year

5-Year

Expense ratio

0.55%

0.55%

Bid-ask spread

0.02%

0.02%

Commission to buy + sell

0.14%

0.03%

Total (annualized)

0.71%

0.58%

source: Index Universe

 

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