Vanilla Still Favorite ETF Flavor In US

October 30, 2013

My colleague Dennis Hudachek, in his blog, “ETF Filings with Blockbuster Potential,” reminded us of the difficulties ETF issuers face in launching new funds.

The data back up Dennis’ contention that the billion-dollar blockbuster launch is a thing of the past. Only two of the launches of the past 12 months have cracked the $1 billion level, and both were bespoken ETN creations.

Cinthia Murphy’s post on the 10 most popular ETF so far this year made clear that nine out of the 10 top asset gatherers year-to-date are what we call plain-vanilla funds—funds based on simple indexes that select and weight securities by market cap. The top asset gatherer, Wisdom Tree’s Japan Hedged Equity fund (DXJ | A-45), stands out as much for its complexity as for its parabolic growth.

Here at Index Universe, we report on events and issues of the day, not on the status quo. The drumbeat of stories on new launches, whether currency-hedged, factor-based or niche-oriented, gives the impression that the U.S. ETF world is embracing complexity. While this may be true in terms of the number of funds and the types of new launches, fund assets tell another story.

The table below ranks the 30-largest funds that together accounted for 50 percent of U.S. ETF assets under management as of Oct. 23. In compiling this table, I took the liberty of categorizing funds by level of complexity: “Vanilla,” “Cookies & Cream” and “Wavy Gravy.”*

“Vanilla” funds are the simplest—selected and weighted by market capitalization; “Cookies & Cream” funds have a sprinkling of complexity in their selection logic; and “Wavy Gravy” funds are the most complex, with selection or weighting schemes that skew their portfolios away from the broad market.




Lean why bond ETFs are an essential part of a diversified portfolio with our bond ETF channel.

Learn how currency-hedged ETFs can reduce the currency risk in your portfolio.


Investors took profits on U.S. equity ETFs on Friday, Nov. 20.

Top three issuers saw net inflows in their products on Monday, Nov. 23.


By Dave Nadig

With the SEC looking to regulate liquidity, should bond ETF investors worry?

By Matt Hougan’s conference offered several actionable ideas for investors.

By Dave Nadig

The exchange just proposed the latest rule to reinvent history on bad ETF trades.

By Matt Hougan

Best deal in the history of finance gets better.


By Nicholas Kalivas

The case for low-volatility, currency-hedged exposure in Europe.

By Nick Stonestreet

ETF firm builds out its business.

By Nicholas Kalivas

A sector-momentum strategy may be just what your portfolio needs in the current market environment.