Biggest ETF Trend Under Your Radar

October 30, 2017

A surprise newcomer is disrupting the ETF business in a big way.

Major insurance companies have launched six of the largest most popular new ETFs of 2017 (eight, if you count Principal, which derives a significant minority of its revenues from insurance sales):

 

Biggest ETF Launches of 2017, by AUM (highlighted ETFs owned by insurance companies)

Ticker Fund AUM ($M) Inception Date
GDVD Principal Active Global Dividend Income ETF 454.18 5/10/2017
CLTL PowerShares Treasury Collateral Portfolio 453.28 1/12/2017
DMRL DeltaShares S&P 500 Managed Risk ETF 402.73 8/2/2017
CSML IQ Chaikin U.S. Small Cap ETF 253.43 5/16/2017
DMRI DeltaShares S&P International Managed Risk ETF  238.55 8/2/2017
SECT Main Sector Rotation ETF  194.80 9/5/2017
GIGB Goldman Sachs Access Investment Grade Corporate Bond ETF  175.63 6/8/2017
FFTI FormulaFolios Income ETF  132.84 6/6/2017
DMRM DeltaShares S&P 400 Managed Risk ETF  126.98 8/2/2017
RBIN Nationwide Risk-Based International Equity ETF 120.62 9/18/2017
CCOR Cambria Core Equity ETF 118.37 5/24/2017
FLQL Franklin LibertyQ U.S. Equity ETF  113.91 4/28/2017
JPGB JPMorgan Global Bond Opportunities ETF  113.43 4/5/2017
RBUS Nationwide Risk-Based U.S. Equity ETF 113.12 9/18/2017
USMC Principal U.S. Mega-Cap Multi-Factor Index ETF  108.98 10/11/2017
MXDU Nationwide Maximum Diversification U.S. Core Equity ETF  108.18 9/18/2017
HYLV IQ S&P High Yield Low Volatility Bond ETF  106.79 2/15/2017
OCIO ClearShares OCIO ETF  104.15 6/27/2017
XMX WisdomTree Global ex-Mexico Equity Fund 103.16 2/10/2017
IDEV iShares Core MSCI International Developed Markets ETF  93.91 3/21/2017

Source: Bloomberg. Data as of Oct. 23, 2017. Insurance companies are highlighted in yellow; Principal is marked in pink.

 

Three of those mega-launches—four, again, if you count Principal—occurred in the last month alone.

That makes insurance companies the Kool-Aid Man of ETF issuers, crashing into the industry to become the breakout stars of 2017.

Yet insurers-turned-issuers are still few in number, and total assets in their funds remain relatively small. As of Oct. 26, only six insurers—John Hancock, Transamerica, Nationwide, Hartford Funds, Principal and now USAA—had issued their own ETFs. (For a full list of ETFs, see the table at the end of this article.)

All told, the 46 ETFs these companies have issued account for just $3.7 billion in assets—chump change compared to the rest of the $3 trillion ETF market. Yet $3.7 billion represents significant market share for a bunch of newcomers, especially in a marketplace that has become increasingly difficult for new entrants to survive.

‘Bring Your Own Assets’

Before we go further, however, we ought to clarify what we mean by "insurance company," because it isn't as straightforward as you might think.

Many insurers exist as branches of larger asset management or financial services firms. Fidelity sells insurance, for example, as does Charles Schwab and Goldman Sachs. But for these firms, insurance doesn't represent their main—or even a significant—source of revenue.

For our purposes, we define "insurance company" as a firm for whom insurance represents a primary or significant source of revenue, even if that vertical is just one of a larger umbrella of financial service offerings. The distinction is important, because the six insurers who've launched ETFs have done so by separating out their ETF operations into wholly owned but independent business lines. For instance, John Hancock Investment is separate from John Hancock Life Insurance Co., and so on.

 

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