What US ETF Market Looks Like Today

April 13, 2017

It was just 24 years ago that the first ETF, the SPDR S&P 500 (SPY), came to market—ETF No. 1.

Now, with 51 new ETF launches having already occurred this year, we are about to hit a milestone: 2,000 ETFs listed in the U.S.

These funds already command more assets than hedge funds in an asset base that grows about 20-25% yearly. With nearly $3 trillion in assets in U.S.-listed ETFs alone, some are already projecting the size of the market to double by 2020.

If you talk to those who were part of the ETF industry’s early days—people like State Street Global Advisors’ Jim Ross and iShares’ former head Lee Kranefuss, you get a sense that no one would have guessed ETFs would take off as they did, and reinvent the way investors access the market.

“The growth of ETFs in U.S. capital markets is a textbook case study in ‘Disruptive Innovation,’ right alongside well-known historical examples like Amazon, Google, Facebook, Netflix and scores of others successful enterprises,” ConvergEx Nick Colas said in a commentary this week. “It is no exaggeration to say that there are more ETFs than investable stocks listed on U.S. exchanges.”

Today’s market definitely looks very different from its early days. The era of plain-vanilla products designed around well-known equity indices is giving way to a wave of innovation that has ETFs tapping into broad, diverse and niche pockets through various strategies today.

Here’s a broad overview of the market’s makeup, with data courtesy of FactSet:

Asset Class

Equity ETFs dominate in numbers and in assets. Roughly 70% of all U.S.-listed ETFs are equity funds—or some 1,385 ETFs in the market today. These U.S. and/or international equity ETFs have about $2.2 trillion in combined assets. That amounts to 78% of all U.S.-listed ETF assets, or nearly $8 out of every $10 invested in ETFs today.

Investors have plenty of choices when it comes to equity ETF exposures.

 

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