## [# ETF Industry Revenue Challenged By Fee Wars](/sections/news/etf-industry-revenue-challenged-fee-wars)
# ETF Industry Revenue Challenged By Fee Wars
ETF issuers know too well that ETF asset growth doesn’t always mean revenue.
[](/contributors/cinthia-murphy)
[By Cinthia Murphy](/contributors/cinthia-murphy)
Edited by: Cinthia Murphy
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We often talk about the impressive growth of the ETF industry—the nearly 2,000 U.S.-listed ETFs in a market that now commands more than $2.6 trillion in the U.S. alone. What we don’t often talk about is how much money this industry makes.
Revenue potential for ETF issuers is often put face-to-face with an ongoing race to the bottom when it comes to investment costs. Every time an ETF issuer slashes the expense ratio on an ETF, that issuer is giving up revenue often in the hopes of attracting more assets to make up for the difference.
Last October, Dave Nadig, CEO of ETF.com, [first offered a peek into the ETF market’s revenue potential](https://www.etf.com/sections/etfcom-analysis/heres-how-much-money-etf-industry-makes?nopaging=1). In his analysis centered on ETF fees, he estimated the nearly $2.5 trillion in ETF assets equate to about $6.0 billion a year in revenue. That’s the size of the overall ETF industry, he said.
He also offered a [detailed look](https://www.etf.com/sections/etfcom-analysis/heres-how-much-money-etf-industry-makes?nopaging=1) at what a round of ETF fee cuts last fall meant to a firm’s bottom line. You may want to check that out.
**BlackRock Earns Lion’s Share Of Profits**
Data through the end of 2016 shows that when it comes to making money as an ETF provider, no one is capturing more than—you guessed it—BlackRock’s iShares.
[iShares is not only the largest ETF provider](https://www.etf.com/topics/ishares-etfs), with 334 ETFs in the market commanding $983.5 billion in total assets at the end of 2016, it’s also the biggest money maker. The firm raked in about $2.5 billion in annual ETF revenue—nearly half of the entire industry revenue in 12 months—and more than double the revenue made by the second-place ETF issuer, State Street Global Advisors.
As Eric Balchunas, ETF analyst for Bloomberg Intelligence, recently put it, “If the ETF market is a jungle, then BlackRock is king.”
Here’s a look at how ETF issuers rank in terms of revenue and assets under management:
Issuer2016 Implied Revenue ($,M)December 2016 AUM ($,M)\# of FundsRank in AUMRank in RevenueBlackRock2,444.25
983,453.11
334
1
1SSGA911.56
503,066.07
149
3
2Vanguard543.34
611,692.19
70
2
3Invesco PowerShares433.27
110,968.85
144
4
4First Trust280.54
41,187.67
114
6
5ProShares220.99
26,152.95
142
10
6WisdomTree197.74
39,937.06
94
7
7Van Eck160.84
30,117.40
58
9
8Guggenheim122.69
31,566.63
76
8
9Direxion103.82
10,725.93
80
15
10ALPS97.33
13,064.01
20
12
11UBS69.24
6,525.48
42
17
12Deutsche Bank54.51
13,395.33
59
11
13Barclays Capital53.48
6,760.68
81
16
14Charles Schwab52.69
59,801.55
21
5
15PIMCO51.36
12,597.37
14
13
16Credit Suisse44.22
3,147.53
24
22
17Northern Trust43.38
11,771.67
25
14
18US Commodity Funds37.61
4,647.94
11
20
19JPMorgan36.62
4,865.49
12
19
20Global X21.69
3,791.54
55
21
21IndexIQ17.22
2,225.64
19
24
22Exchange Traded Concepts15.63
2,156.35
20
25
23AdvisorShares13.44
1,072.23
22
28
24Millington Securities Inc11.09
1,039.22
12
29
25ETF Securities9.99
2,139.42
7
26
26Fidelity7.56
5,192.14
21
18
27Columbia7.50
922.81
14
30
28ETF Managers Group6.72
893.33
13
32
29Goldman Sachs6.36
2,711.87
9
23
30OppenheimerFunds6.29
1,597.98
9
27
31Virtus5.75
596.94
9
35
32CitiGroup5.23
466.25
5
39
33Teucrium4.73
154.75
5
44
34Pacer Financial4.60
735.18
5
33
35The Principal Financial Group3.68
546.40
6
36
36Victory Capital Management3.31
908.68
11
31
37Swedish Export Credit2.96
394.00
7
41
38John Hancock2.76
657.69
12
34
39Highland Capital Management2.64
479.25
1
38
40FQF Trust2.56
435.82
10
40
41Franklin ETF Trust2.31
525.52
7
37
42Cambria2.01
328.78
9
42
43KraneShares1.81
246.25
5
43
44Alpha Architect1.07
135.28
4
46
45Arrow Investment Advisors0.90
109.46
3
50
46Janus0.76
138.52
10
45
47Elkhorn0.64
119.67
15
48
48Lattice Strategies0.53
104.03
5
51
49ARK0.48
65.68
5
55
50Merk0.45
112.07
1
49
51Recon Capital0.44
78.234
53
52Legg Mason0.43
132.26
7
47
53US Global Investors0.40
65.99
1
54
54Reality Shares0.39
46.23
4
58
55Morgan Stanley0.31
50.05
5
57
56Academy Funds0.29
36.53
1
59
57Nuveen0.24
86.86
7
52
58AlphaMark Advisors0.22
24.57
1
61
59Montage Managers0.22
54.49
1
56
60Aptus Capital Advisors0.21
26.08
1
60
61Validea Capital Management0.18
22.44
1
62
62Royal Bank of Canada0.11
12.32
2
66
63Renaissance Capital0.09
14.27
2
64
64ACSI Funds0.08
12.20
1
67
65Natixis0.07
13.45
1
65
66Amplify0.07
10.62
3
68
67CSOP0.06
8.51
3
69
68Premise Capital0.05
5.13
1
73
69LocalShares0.04
8.06
1
70
70TrimTabs Asset Management0.04
6.10
1
71
71USCF Advisers0.03
5.62
2
72
72AlphaClone0.03
2.86
1
74
73Diamond Hill0.02
16.86
1
63
74What’s also noteworthy is that nearly half of iShares’ 334 ETFs are categorized by the firm as “strategies,” meaning smart-beta ETFs, currency-hedged funds, equity income and ESG-focused funds, and the like. These ETFs often have a higher average expense ratio than plain-vanilla funds.
iShares also has more than twice the number of ETFs that SSgA offers, and almost five times as many ETFs as Vanguard has. So the firm is making the most money among ETF issuers, but it’s in great part thanks to a footprint that vastly exceeds that of its closest competitors.
In the end, the story here is that fee compression means revenue compression unless, of course, these increasingly attractive price tags for ETFs translate into more new investors piling into ETFs like never before, bringing in loads of new assets to ETF issuers’ hands.
“Everyone is focused on the booming flows and asset growth into ETFs, but the revenue growth is lagging behind thanks to the fee war and investor cost migration,” Balchunas said. “Looking at this data offers a sneak peek into the future of asset management, which looks more like a jungle than a country club.”
To Nadig, all of this means we’re headed for a “bifurcation” of the ETF market:
*“On one hand, we’re going to have a lot of assets in a small number of very low-cost plain-vanilla products, which, on a dollar by dollar basis, are relatively unimportant to the bottom lines of their issuers. On the other end of the barbell, we’ll continue to see a raft of relatively high-cost ETFs chasing themes, factors, fundamentals, niche markets and using leverage, which can be enormously important to the bottom line.”*
*Contact Cinthia Murphy at* [*cmurphy@etf.com*](mailto:cmurphy@etf.com)
[ Cinthia Murphy ](/contributors/cinthia-murphy)
Cinthia Murphy is head of digital experience, advocating for the user in all that etf.com does. She previously served as managing editor and writer… [View Bio](/contributors/cinthia-murphy)
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