The Annual ETF.com Awards

May 01, 2020

ETF OF THE YEAR

WINNER: Vanguard Total International Bond Index (BNDX)

John DiCiaccio

The ETF of the Year this time around is a fund that’s supposed to be boring—we’re talking deadly boring. After all, bonds are supposed to provide the ballast to a portfolio when markets are recklessly rampaging upward and soften the blow when they tank. They’re generally considered a stabilizing force.

With the SPDR S&P 500 ETF Trust (SPY) charging past records all year—ultimately rising more than 30%—it’s no wonder ETF investors started getting a little nervous and flooded into fixed income funds, to the tune of more than $150 billion in inflows. At the same time, BNDX consistently did its job, trucking along behind SPY and moving steadily upward to offer a nearly 8% annual return.

The fund also saw record inflows during the year, roughly doubling its assets under management as it gained more than $11 billion, propelling it into the ranks of the top 10 ETFs for inflows for the year.

BNDX is an investment-grade, non-USD-denominated bond index, hedged against currency fluctuations for U.S. investors. Its main competitor is the very similar iShares Core International Aggregate Bond ETF (IAGG), which is just 1 basis point more expensive, but has a little more than half the number of BNDX’s holdings. IAGG has $2.2 billion in assets.

The performance of the two funds is closely matched, which is unsurprising given that they track very similar indexes. They’re essentially the only funds covering this exact space.

Ultimately, BNDX offers low-cost and highly liquid exposure to a core asset class, and in 2019, it performed exactly the way it was intended. For these reasons, it’s a worthy recipient of the ETF of the Year award.

MOST INNOVATIVE NEW ETF

WINNER: Direxion MSCI USA Cyclicals Over Defensives ETF (RWCD)

Innovation is really the name of the game with ETFs, and in 2019, Direxion pushed the boundaries a little more, when it rolled out a family of ETFs that take long/short positions in what are typically seen as opposing macro trends. The Direxion MSCI USA Cyclicals Over Defensives ETF (RWCD) offers long exposure to cyclical stocks and short exposure to defensive stocks, a strategy that has served it well.

While there have been other long/short products available, no issuers have used this approach with such specificity, and none for such a low expense ratio. RWCD is representative of a lineup of 10 ETFs that play different macro pairs against each other such as foreign versus domestic, emerging markets versus developed markets and large versus small. The funds allow shareholders to express their opinions on macro trends with a chance for greater returns than would be possible with a long-only exposure.

The funds give investors easy access to a strategy that would require careful monitoring to execute on one’s own, and at a reasonable price—most of the funds in the family cost 55 basis points or less. 

BEST NEW ETF, U.S. EQUITY ETF, ESG ETF

WINNER: iShares ESG MSCI USA Leaders ETF (SUSL)

The iShares ESG MSCI USA Leaders ETF (SUSL) drew a lot of attention when it launched last May, as it was one of two ETFs backed by Finland mutual pension insurer Ilmarinen. SUSL quickly crossed the $1 billion assets mark less than one month after its rollout to become the biggest launch of the past 15 years.

It was perhaps one of the most unexpected horse races of the year: two ESG ETFs vying for the title of largest launch. But SUSL has pulled ahead of its virtual doppelganger—the Xtrackers MSCI U.S.A. ESG Leaders Equity ETF (USSG), which tracks a virtually identical index—in terms of assets, and has significantly higher liquidity.

SUSL tracks an index derived from the MSCI USA Index and offers exposure to large- and midcap U.S. firms with favorable ESG traits relative to their sector peers. It automatically excludes companies with significant involvement in the tobacco, alcohol, gambling, nuclear power and weapons industries. The remaining companies are evaluated using 37 environmental, social and governance (ESG) factors. The index methodology selects the top-ranked securities based on ESG scores for each sector until 50% of the sector weight in the parent index is represented.

The ETF tracks almost exactly the same index as USSG. However, it has stricter exclusions related to civilian firearms, and requires its components to have slightly higher ESG scores and ratings than the methodology of USSG’s underlying index. Currently, both ETFs have the same number of components (roughly 300) and similar component lists. On the surface, these funds are essentially identical, but SUSL bulked up much more quickly than its counterpart.

Essentially, it represents the best-in-class securities from its parent index with regard to ESG principles. One could even argue that it’s one of the purest examples of ESG exposure available in an ETF wrapper. Indeed, it has an MSCI ESG Rating of AA, a notch below the highest possible rating of AAA, which is held by only a few ETFs, most of which are not marketed as ESG funds. For all of these reasons, it’s no surprise that SUSL has netted a trifecta of awards: Best New ETF – 2019, Best New U.S. Equity ETF – 2019 and Best New ESG ETF – 2019.

BEST NEW INTERNATIONAL/GLOBAL EQUITY ETF

WINNER: Freedom 100 Emerging Market ETF (FRDM)

It’s not every day you come across a genuinely new take on investing, but the Freedom 100 Emerging Market ETF (FRDM) is one such bona fide innovation.

FRDM’s first-of-a-kind “freedom weighting” selects and weights countries based on the social, political and economic freedoms afforded to their citizens. These include the amount of violent conflict the country experiences, the freedom of its press and judicial systems, how freely its citizens can access capital, and more.

As a result, freedom weighting reduces and, in many cases, eliminates exposure to authoritarian regimes. Unlike almost every other emerging market ETF on the market, FRDM has no exposure to China. Nor does it hold stocks from other troubling EM mainstays, such as Russia, Brazil and Saudi Arabia.

Voters praised FRDM’s uniqueness and data-driven approach to impact investing. One voter even went so far as to express relief that there finally existed an international equity ETF that “doesn’t help reinforce the power of tyrants around the world.”

For years, investing in emerging markets has required, to a certain extent, holding one’s nose. With FRDM, however, investors now have the option to harness the growth potential of emerging markets while satisfying their conscience.

 

BEST NEW U.S. FIXED INCOME ETF

WINNER: Quadratic Interest Rate Volatility and Inflation Hedge ETF (IVOL)

The Quadratic Interest Rate Volatility and Inflation Hedge ETF (IVOL) is an actively managed portfolio of TIPS and options on the yield curve. Launched less than a year ago, IVOL is providing institutional-type access to its investors, further increasing the democratization of financial markets.

Adding this new edge to U.S. fixed income ETFs has earned IVOL the “Best New U.S. Fixed Income ETF” award for 2019.

IVOL actively hedges against inflation and yield curve shifts using TIPS (or TIPS-based ETFs) and long options. IVOL’s TIPS protect against an unexpected increase in inflation. IVOL takes long positions on over-the-counter options tied to the shape of the U.S. interest rate swap curve, which would rise in price if the curve steepens or interest rate volatility increases.

The cost of the options will decrease IVOL’s returns relative to TIPS in a steady interest rate environment, but they may prove their worth in a volatile one.

Because of its use of options, IVOL carries a pricey expense ratio, at 0.99%, a consequence of the underlying trading. The fund trades at a 60-day spread of 0.15%, which brings the buy-in price up above 1%.

However, this is a unique fixed income product, characterized by the issuer as “long fixed income volatility.” It’s about hedging—a good tool for any investor. And its asset gathering in less than a year is a testament to that.

BEST NEW INTERNATIONAL/GLOBAL FIXED INCOME ETF

WINNER: SP Funds Dow Jones Global Sukuk ETF (SPSK)

Faith-based investments are nothing new, but they remain relatively uncommon in the bond world. Islam, in particular, prohibits the collection of interest on loans—which essentially means Muslim investors may not use the vast majority of traditional, Western-style fixed income investments.

Enter the sukuk. Sukuks are Shariah-compliant financial certificates that grant holders partial ownership in some underlying asset. Like bond owners, sukuk holders receive regular payments. But those payments don’t originate from the interest collected on a debt; instead, they’re taken from the earnings the asset generates. Thus, sukuks aren’t so much debt obligations as they are profit-sharing arrangements.

The SP Funds Dow Jones Global Sukuk ETF (SPSK) is the first fixed income ETF to provide diversified, transparent exposure to sukuks, which are a mainstay of Islamic finance, yet can be difficult for individual investors to access, as they typically trade in over-the-counter transactions.

SPSK solves a real problem for real investors, allowing Muslim and secular investors alike to participate in an asset class that, until now, they’ve had little means of accessing via an ETF. It also makes a compelling fixed income diversifier, as sukuks have similar, but not equivalent, risk/return profiles as their Western bond cousins.

 

BEST NEW COMMODITY ETF

WINNER: iPath Series B Carbon ETN (GRN)

The award for Best Commodity ETF of 2019 was nearly a freebie. Only two products were nominated out of the three commodity products that launched during the year. That tells you how out of favor the asset class has been lately.

All three of 2019’s commodity launches were issued by Barclays under the iPath brand—the iPath Gold ETN (GBUG), the iPath Silver ETN (SBUG) and the iPath Series B Carbon ETN (GRN).

The winner of the Best New Commodity ETF award went to GRN, a replacement product for the original iPath carbon product. GRN offers similar exposure as its predecessor, maintaining its position as the only exchange-traded product to track carbon prices.

GRN tracks the return of futures contracts on carbon emission credit prices from two of the world’s major emissions-related mechanisms—the European Union Emission Trading Scheme and the Kyoto Protocol’s Clean Development Mechanism—with the former making up the bulk of the exposure.

Like many commodity products, returns on GRN haven’t been anything to write home about, but the exchange-traded note provides unique exposure to something that may become increasingly important as investor concerns about the environment and climate change grow.

BEST NEW ALTERNATIVES ETF

WINNER: RPAR Risk Parity ETF (RPAR)

The winner of 2019’s Best New Alternatives ETF award didn’t just get a stamp of approval from the voting committee; it’s gotten the most important stamp of approval of all—from investors. In less than three months on the market, the RPAR Risk Parity ETF (RPAR) won the Best New Alternatives award and picked up $271 million in assets.

RPAR’s multi-asset portfolio has been resonating with investors at a time when concerns about global growth and equity valuations are widespread. The fund diversifies its allocation across equities, Treasuries, Treasury inflation-protected securities and commodities, aiming to “generate positive returns during periods of economic growth, preserve capital during periods of economic contraction, and preserve real rates of return during periods of heightened inflation.”

According to Advanced Research Investment Solutions, the provider of the index that RPAR tracks, risk parity strategies aim to provide investors a more consistent return over time, an approach that differs from traditional portfolio allocation strategies, which tend to be overly dependent on environments that favor strong equity performance.

RPAR’s expense ratio of 0.50% is on the low end for alternatives ETFs, which may make it more appealing to investors.

 

BEST NEW ASSET ALLOCATION ETF

WINNER: Strategy Shares Newfound/ReSolve Robust Momentum ETF (ROMO)

The Strategy Shares Newfound/ReSolve Robust Momentum ETF (ROMO) is an ETF of ETFs that toggles its portfolio allocation between global equities and short- and midterm U.S. Treasuries.

The mix, which is dictated by its quantitative underlying index, is based on momentum and other trend-following signals in a methodology designed by Newfound Research and Resolve Asset Management. At its extreme, ROMO can be 100% allocated to developed market equities, or 100% tied to Treasuries at any given time, depending on market conditions, using anywhere between one to five ETFs to achieve its goal.

At the end of the day, this is a global equity portfolio accessing U.S., developed and emerging market stocks in an effort to capture equity growth, but one that has a built-in system of de-risking in the face of market drawdowns. ROMO is an effective risk management tool that allows for upside participation, and downside protection.

If timing a launch perfectly were part of this award nomination, in this, too, ROMO is a winner, coming to market last November, not too long before the U.S. stock market’s most dramatic correction in history in early 2020.

BEST NEW SMART BETA OR FACTOR ETF

WINNER: GraniteShares XOUT U.S. Large Cap ETF (XOUT)

GraniteShares, a firm known primarily for its low-cost commodity ETFs, has branched out in new directions, most recently with the launch of the GraniteShares XOUT U.S. Large Cap ETF (XOUT). The fund uses a smart beta approach that focuses on excluding companies deemed likely to underperform rather than on picking outperformers.

The methodology evaluates the largest 500 U.S. stocks based on revenue growth, hiring growth, capital deployment, share repurchases, profitability, earnings sentiment and management performance, as well as deposit growth for banks. Companies with scores ranking below the median quintile are excluded. Selected components are weighted by market capitalization and reconstituted on a quarterly schedule.

The strategy seems to be working—at least initially. The fund has outperformed the SPDR S&P 500 ETF Trust (SPY) during 2020, and has a dramatically different sector distribution from SPY, with a significantly larger technology weighting. That overweight in the high-flying technology sector has likely driven much of the fund’s outperformance.

With its focus on avoiding losers rather than picking winners, XOUT takes a unique angle on the smart beta concept. And so far, that seems to be a good one.

 

BEST NEW ACTIVE ETF

WINNER: Avantis U.S. Equity ETF (AVUS)

It’s hard to be too excited about an actively managed U.S. equity ETF given the unflattering historical data of underperformance this segment of active managers faces relative to benchmarks year after year. It’s also tough to accept that track record for what’s typically heftier fees than those of passive equity funds. But the Avantis U.S. Equity ETF (AVUS) tackled those head winds right out of gate, exciting active investors, who quickly poured $160 million into the fund shortly after launch.

The secret to AVUS’ immediate traction, in part, is its issuer’s commitment to making active management competitively priced. American Century Investments (ACI) is offering its active managers’ expertise for 0.15% in expense ratio—or $15 per $10,000 invested in AVUS.

The fund also offers an interesting multifactor approach to owning U.S. equities, looking for highly profitable names that also offer good value. To that end, the portfolio manager looks at the broad U.S. equity universe, and tilts toward high-return, high-profit companies by focusing on those of smaller capitalizations, as well as value names.

AVUS also underweights larger cap stocks that have lower profitability and higher price tags. This is an active ETF that came to disrupt the segment by bringing ACI’s well-established expertise for a low bargain price.

THEMATIC ETF OF THE YEAR

WINNER: Global X Cloud Computing ETF (CLOU)

When it comes to a thematic ETF that hits a home run in its first at-bat, the focus needs to resonate and be easily understood to attract assets.

CLOU provides exposure to a market-cap-weighted global equity index of companies involved in the cloud computing industry. The ETF holds firms that license and deliver software over the internet by subscription, provide a platform to create software via internet, provide virtualized computing via internet, own or manage data centers, or make or distribute related hardware. Firms must have revenue of at least 50% from these activities to make the cut.

The fund’s underlying index also allows the inclusion of any firm that earns more than $500 million from such actions, regardless of revenue percentage. The index selects firms across the cap spectrum and in developed and emerging markets.

CLOU was launched in April 2019 and quickly attracted assets, now standing at $404 million even after some AUM slippage due to the March crash. And it’s pricey for a market cap equity ETF, with a 0.68% expense ratio. But with what’s unfolded in 2020 with the coronavirus, CLOU could be the ideal investment focus for the way people work in the future—in the cloud.

 

PEOPLE’S CHOICE

WINNER: ProShares S&P Technology Dividend Aristocrats ETF (TDV

The People’s Choice award is selected every year during the Pundit’s ETF Panel at the Inside ETFs conference. The panel features some of the best-known ETF experts arguing the case for what they believe to be the best new ETF to launch in the previous calendar year. The audience—consisting of industry, institutional and retail ETF fans, advisors and traders—votes on the winner.

At the conference this year, ETF.com’s Cinthia Murphy pitched the benefits of the ProShares S&P Technology Dividend Aristocrats ETF (TDV), which offers dividend-focused exposure to the S&P 500 Index’s technology sector, and the fund ultimately won the competition.

The key argument for TDV is that it offers exposure to the exciting but volatile technology sector, with an added quality screen in the form of the dividend requirement. The fund includes only companies from the S&P 500’s technology sector that have grown their dividends for at least seven consecutive years. That serves as a stabilizing force in a sector known for its wild swings—think growth meets income.

When one competitor challenged TDV, arguing that the portfolio holds Mastercard and Visa among its top holdings, and that those aren’t really tech, Murphy replied, “You must still be writing paper checks if you think Visa and Mastercard aren’t tech companies.” The crowd went wild.

ETF HIDDEN GEM

WINNER: VanEck Vectors Green Bond ETF (GRNB)

A “Hidden Gem” ETF is a smaller ETF, with no more than $50 million in assets under management, regardless of when it launched, that has gone unnoticed by investors but is innovative, unique and worth your attention. The VanEck Vectors Green Bond ETF (GRNB) carries that mantle well.

Issued in 2017, the fund has not attracted investor assets quickly, but it may have been ahead of its time, as ETFs embracing socially responsible investing have seen growing acceptance more recently.

GRNB tracks a market-value-weighted index of USD bonds issued for climate change mitigation or other environmentally beneficial projects, as identified by the Climate Bonds Initiative. The fund is a rarity in the fixed income space: an ESG-focused fund with a global scope and passive management. GRNB invests in bonds issued to finance “green” projects—primarily solar, wind and low-carbon construction.

The fund is reasonably priced—0.20%—and had been a decent price performer, like many bond ETFs, before the recent market collapse. The green title will have legs as investors catch up to the concept of an ESG strategy wrapped in a fixed income ETF.

 

ETF ISSUER OF THE YEAR

WINNER: Innovator ETFs

Innovator ETFs launched its first defined outcome “Buffer” ETFs back in 2018, but 2019 was the year the family really took off. Not only did Innovator start expanding its offering of S&P 500 Index-linked ETFs to cover each month rather than just each quarter, the firm also began launching similar defined outcome ETFs targeting other major U.S. indexes as well as emerging and developed markets.

The defined outcome ETFs buffer investors from a certain percentage of loss during the one-year outcome period, but also limit the positive upside to a percentage determined at the start of each outcome period. The funds are all actively managed and hold flexible exchange (FLEX) options tied to the index the funds are looking to replicate. The price of the FLEX options on the day of the fund’s annual reset determines the upside cap for the next 12 months.

Although Innovator offers several other ETFs, the Buffer ETFs dominate its lineup, with roughly 40 offerings in the family so far. The funds ultimately offer investors a risk-controlled way to participate in the market, and are the first products of their kind.

NEW ETF ISSUER OF THE YEAR

WINNER: Tidal ETF Services (SoFi)

Toroso Investments was nominated for this award due to its launch of the SoFi ETFs last year. The firm, which operates its white label ETF business under the name Tidal ETF Services, rolled out a total of eight ETFs under its exemptive relief in 2019, its first batch of launches. Those funds had more than $750 million in assets under management toward the end of February.

However, the SoFi funds stand out among these for their innovation. The largest is the $67 million SoFi Select 500 ETF (SFY), a large cap U.S. smart beta ETF with a growth tilt that has an expense ratio of zero after the application of a waiver. Essentially, SoFi simultaneously launched its flagship ETF and threw down a gauntlet at a time when issuers are shaving basis points from expense ratios by simply tossing the expense ratio out the window.

It did the same with the $7.7 million midcap-focused SoFi Next 500 ETF (SFYX), which launched with SFY. Both funds have growth-focused portfolios designed to appeal to SoFi’s younger customer base. The firm is known as a personal finance company, and started out providing student loan refinancing.

 

MOST INNOVATIVE ETF ISSUER

WINNER: ARK

ARK is quickly becoming the ETF issuer to watch in this industry. In an ocean of passively managed ETFs and active management naysayers, the small but mighty ARK continues to gain traction, grow its following, buck active outflow trends, and expand its reputation as the firm behind some of the most exciting ahead-of-the-rest disruptive technology ETF ideas.

The hallmark of ARK’s approach, led by Cathie Wood, is its high-conviction portfolios designed to own the disruptive leaders, capitalizing on fast-moving industries and avoiding companies that are most likely to be displaced by new technology.

In 2019, four of ARK’s best-known ETFs hit their first five-year track record milestone, and the firm’s biggest strategy, the ARK Innovation ETF (ARKK) is now a $2 billion ETF, the second-largest actively managed equity ETF on the market today.

The firm is showing no signs of slowing down, pushing innovation further and bringing to market in 2019 the ARK Fintech Innovation ETF (ARKF), which focuses on disruptive technology in the financial industry. Like many of the other ARK ETFs—now seven in total, commanding about $3.3 billion in total assets—ARKF already crossed the $100-million-in-assets mark in its first year, making it one of the most successful ETF launches of 2019.

BEST ETF ISSUER WEBSITE

WINNER: iShares

BlackRock’s iShares unit continues its winning streak when it comes to Best ETF Issuer Website, claiming the prize for 2019, as it has every year since the ETF.com Awards began. The site undergoes regular facelifts but consistently remains well-designed and easy to understand.

The sheer volume of choices and information on the main page is vast. At the very top, visitors can select from going to a fund list; investment ideas from iShares; a “Market Insights” option featuring the latest BlackRock research; educational pieces on investing and ETFs; and the extensive iShares resource library.

However, if investors stick to the main page and continue to scroll down, they can read an article about a highlighted topic or search for a specific fund by name, ticker or product type. Navigate further down the main page, and there are more opportunities to learn about ETFs and iShares products, specifically.

Essentially, the site offers multiple ways to access the same key pieces of information, ensuring investors will inevitably find what they’re looking for. The educational material can guide beginners with regard to getting started building a portfolio, while the research information available is sure to please more sophisticated investors. And of course, you can research each and every one of iShares’ nearly 370 ETFs.

 

BEST NEW ETF TICKER

WINNER: NERD

This award category is possibly the most fun. For those of us who spend our days researching the ETF space, it’s always exciting to see a new ETF come to market and offer brand new access to investors, but we also love a catchy ticker! A descriptive, memorable ticker can go a long way in helping a new ETF find traction in a universe of 2,200-plus funds.

Every year, the list of nominees and finalists in this category is a colorful, clever display of marketing genius in the ETF business. In 2019, finding the best-in-class was no easy task. But the Roundhill BITKRAFT Esports & Digital Entertainment ETF takes the prize.

Yes, this fund has a name that’s a bit of a mouthful, but its ticker is brilliant: NERD. If you’re an esports enthusiast, or a die-hard video gamer, you may resent the implication. You may even argue you’re cool. But let’s be serious: You’re a total nerd, and Roundhill Investments is here for you. NERD is catchy, it’s memorable and it’s downright spot-on for this strategy. Go NERDs!  

INDEX PROVIDER OF THE YEAR

WINNER: Solactive AG

The Index Provider of the Year award was a bit of a wild ride this time. Top-notch index providers such as S&P Dow Jones Indices, FTSE Russell and MSCI didn’t even make it onto the final ballot. But well-known independent index provider Solactive AG repeated its win from the 2017 awards for 2019.

Founded in 2007 in Germany, the boutique firm’s benchmarks now underlie more than 450 ETFs worldwide, and Solactive-branded indexes currently serve as the underpinnings for 63 ETFs in the U.S. alone. The largest of those is the $3 billion Xtrackers USD High Yield Corporate Bond ETF (HYLB), followed by the $497 million Global X SuperDividend ETF (SDIV) and the $388 million Global X Lithium & Battery Tech ETF (LIT).

Solactive offers its own lineup of benchmarks as well as customized products tailored to client specifications. It’s fairly unique in the index space, as it was founded independently as an index provider rather than springing into existence as the offshoot of a larger company.

In its dozen or so years of existence, the firm has steadily worked its way into the fabric of the global ETF industry, not to mention other financial vehicles like structured products. Solactive offers its own lineup of benchmarks as well as customized products tailored to client specifications.

 

INDEX OF THE YEAR

WINNER: Life + Liberty Freedom 100 Emerging Markets Index

The Index of the Year for 2019 underlies one of the most-talked-about ETFs of the year, the Freedom 100 Emerging Market ETF (FRDM), which was itself nominated for multiple awards and won Best New International/Global Equity ETF – 2019.

The Life + Liberty Freedom 100 Emerging Markets Index has 100 components selected from developing markets that are arrived at in a manner largely unprecedented in the index space. The index evaluates countries based on criteria linked to the concepts of life and liberty. For “life,” the methodology considers the existence of terrorism, human trafficking, torture and political detentions in a country, while for “liberty,” the methodology looks at the presence of rule of law, due process, freedom of the press, freedom of religion and freedom of assembly.

There’s also a set of property-related standards that evaluate countries based on marginal tax rates, access to international trade, business regulations, established monetary and fiscal institutions, and size of government.

The end result is that prominent emerging markets are excluded from the index. China and Russia, for example, simply don’t meet the benchmark’s freedom standards. That translates into a dramatically different type of exposure to emerging markets than standard indexes offer.

ETF LIQUIDITY PROVIDER OF THE YEAR

WINNER: Jane Street

Liquidity providers quite literally make ETF markets by enabling parties on both sides of a trade to find each other efficiently and effectively. The right liquidity support can make or break an ETF, ultimately leading to either asset growth or closure.

Veteran firm Jane Street is our voters’ pick for Liquidity Provider of the Year for the second year in a row. As one of the oldest and largest such liquidity providers, the firm trades in more than 5,000 ETFs worldwide.

In addition, Jane Street continues to expand its reach, with over 100 ETF-dedicated traders doing more than $9.5 billion in ETF business daily. Voters praised Jane Street’s consistency, speed in execution, and commitment to product support across all points of an ETF’s life cycle.

 

ETF CUSTODIAN OF THE YEAR

WINNER: U.S. Bank

Peek into the prospectuses of some of 2019’s most innovative launches, and you’ll see one name crop up again and again: U.S. Bank.

In fact, U.S. Bank has provided custodial services to several other of 2019’s award winners, including the Innovator Defined Outcome ETFs, the first Islamic fixed income ETF (SPSK) and the first freedom-weighted emerging market ETF (FRDM).

It’s that commitment to innovation that motivated our voters to choose U.S. Bank for ETF Custodian of the Year for 2019. Lauded for its great service and reasonable fees, U.S. Bank earned accolades for its behind-the-scenes product support, from concept to launch and beyond.

In particular, commenters praised U.S. Bank’s willingness to work with smaller, boutique issuers, who often get overlooked by other custodians. Without them, said one commenter, “The industry wouldn’t be expanding.”

BEST ONLINE BROKER FOR ETF-FOCUSED INVESTORS

WINNER: Charles Schwab

The awards committee has given Charles Schwab the 2019 award for Best Online Broker for ETF-Focused Investors, and it’s easy to see why. The website and mobile apps are well-designed, making trading and tracking portfolios a breeze.

By using Schwab, investors have access to commission-free trading on all ETFs (and stocks, too), whether they’re trading in the U.S. or in Canada. That includes commission-free trading on Schwab’s suite of low-cost ETFs, as well as on ETFs from other issuers.

The committee viewed Charles Schwab’s customer service positively, an important factor that separates it from newer brokers like Robinhood, which are not as hands-on.

 

BEST ETF PLATFORM

WINNER: Charles Schwab

Already beloved for its ultra-low-cost ETFs, Charles Schwab has also been awarded the title of Best ETF Platform of 2019. The firm is a pioneer in low-cost ETF investing. Even before commission-free trading became widespread, Charles Schwab took the lead, allowing hundreds of ETFs to be bought and sold without commissions on their platform. For that, the firm deserves significant credit.

Today Schwab still offers trading in ETFs for free, access to its suite of low-cost funds, and a host of ETF resources, including screeners, research and education. The firm also offers packaged solutions through Windhaven, SMP ETFs, Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium.

Schwab’s ETFs are among the lowest cost in the business, with annual expense ratios mostly below 0.1%. Its largest ETFs include the Schwab International Equity ETF (SCHF), the Schwab U.S. Large-Cap ETF (SCHX) and the Schwab U.S. Broad Market ETF (SCHB).

The firm also offers fixed income funds, like the Schwab U.S. TIPS ETF (SCHP), the Schwab U.S. Aggregate Bond ETF (SCHZ) and the Schwab Short-Term U.S. Treasury ETF (SCHO).

BEST INDEX PROVIDER WEBSITE

WINNER: Alpha Architect

The first thing you see on Alpha Architect’s website is a statement: “An asset manager built to educate.” Backing that mission statement is a deep trove of data, blogs, analysis, research and insight available to anyone who’s looking to learn about, first and foremost, the firm’s approach to index and ETF investing, but also about investing in general.

In this industry, much lip service can be paid to the claim of transparency, but Alpha Architect delivers on that principle, putting its expertise, methodology and research fully on the table, or more specifically, on the worldwide web. The firm’s website, alphaarchitect.com, is bright and intuitive, offering easy-to-navigate content, from a lineup of suggested investing books authored by Wes Gray, Jack Vogel and David Foulke, to links to its various strategies including long-only, alternatives and custom asset allocation, to opportunities for readers and clients to interact with the firm on social media.

To anyone who’s met Wes Gray and his team at Alpha Architect, the openness and dedication to investor education apparent on the firm’s website comes as no surprise. This is a website that’s a favorite among die-hard ETF nerds and ETF enthusiasts alike.

 

BEST ETF ISSUER CAPITAL MARKETS DESK

WINNER: iShares

In some ways, an issuer’s capital markets desk is the unsung hero of ETF trading. Seldom talked about, capital markets desks facilitate ETF trading and execution by connecting investors with liquidity providers. They’re also an excellent resource of trading information and insight for the advisory channel, readily available to answer questions and walk clients through a trade.

The job requires extensive data and analytics capabilities, trading expertise, industry and product knowledge, and deep relationships across the ETF ecosystem, from authorized participants to exchanges to regulators. The iShares capital markets desk excels on all those fronts, using various proprietary analytical tools and expertise to deliver effective trading execution and guidance to its institutional client base as well as the investing community at large.

The team, which handles millions of orders a year, knows ETF trading like few do, and is ready to offer its deep insight and straight answers to anyone who comes asking.

ETF INVESTOR OF THE YEAR

WINNER: CLS Investments

The ETF Investor of the Year award goes to the ETF strategist, model portfolio provider, automated investment service or institutional investor that has done the most to improve investor outcomes in 2019. Omaha-based CLS Investments has been here before, winning this award in 2017, the first year this award was given out. The advisory firm has been a heavy user of ETFs, and has also added thought leadership to the space with its blogs and website content.

In 1989, W. Patrick Clarke became the majority partner in creating the independent asset allocation firm Clarke Lanzen Skalla Investment Firm LLC, founded on lessons Clarke learned as both a financial advisor and an individual investor. That company would eventually become CLS Investments, which for years has had a voice in demonstrating and teaching the value and advantages of ETFs. It has not wavered from its core belief that ETFs are the best way for its clients to invest.

CLS Investments fulfills the criteria for the ETF Investor of the Year award and then some, as other advisors, ETF issuers and the awards voters recognize.

 

ETF LAW FIRM OF THE YEAR

WINNER: Morgan, Lewis & Bockius

Morgan, Lewis & Bockius takes the ETF Law Firm of the Year award for having done the most to push the ETF industry forward, including driving new and innovative products through the SEC, advocating for the industry and the rights of investors, and improving outcomes for investors.

The global firm of more than 2,200 lawyers has dedicated a portion of its business to the ETF industry, and the firm’s impact has resonated throughout the ETF issuer and service provider realm, as our third-party industry voters affirmed.

The firm circulates newsletters on key ETF topics as needed, and its roster of lawyers with deep ETF experience includes such names as Laura Flores and John McGuire.

Morgan, Lewis & Bockius has won multiple innovation awards over the years from The American Lawyer magazine. Its dedication to the exchange-traded fund as an innovative investment vehicle has certainly contributed to those accolades. While the firm is a behind-the-scenes service provider largely unknown to the wider public, the ETF industry knows Morgan, Lewis & Bockius well, and has recognized it with this award.

Methodology

ETF.com Award winners are selected in a three-part process designed to leverage the insights and opinions of leaders throughout the ETF industry

Step 1
The awards process began with open nominations, which started Dec. 4, 2019, and closed Jan. 4, 2020. Interested parties could submit nominations via the publicly available survey form. Self-nominations were accepted. Nominators could nominate in as many categories as they liked. You cannot win if you were not nominated, and no nominations were accepted after the deadline. There are no exceptions to these rules.

Step 2
Following the open nominations process, the ETF.com Awards Nominating Committee— made up of ETF.com editorial staff—reviewed nominations. Nominations were screened for eligibility (appropriate timing and category). If more than five unique entries were received in the nomination process, the members of the Nominating Committee force-ranked their top five, resulting in a final slate for each category. Votes were resolved on a majority basis, and ties broken where possible with head-to-head runoff votes. If ties could not be broken, more than five finalists were allowed. The Nominating Committee completed its work by Jan. 10, 2020. Shortly thereafter, the nominees were published on ETF.com.

Step 3
Winners among these finalists were selected by a majority vote of the ETF.com Awards Selection Committee, a group of independent ETF experts from throughout the ETF community. Committee members recused themselves from voting in any category in which they or their firms appeared as finalists. Ties were decided where possible with head-to-head runoff votes. Voting completed by Jan. 31, 2019, but results were kept confidential until their announcement on April 2, 2020.

2019 Awards Selection Committee: ETFs & Issuers

  • Kim Arthur, Main Management
  • Eric Balchunas, Bloomberg Intelligence
  • Ben Blaisdell, US Trust
  • John Davi, Astoria Advisors
  • Emily Doak, Charles Schwab Investment Advisory
  • Debbie Fuhr, ETFGI
  • Nate Geraci, ETF Prime/ETF Store
  • Matt Hougan, Inside ETFs
  • Ben Johnson, Morningstar
  • Elisabeth Kashner, FactSet
  • Ben Lavine, 3D Asset Management
  • Tom Lydon, ETF Trends
  • Tyler Mordy, Forstrong Global Asset Management
  • Todd Rosenbluth, CFRA
  • Dan Weiskopf, ETF Think Tank

2019 Awards: Service Providers
For 2019, we established a separate set of awards for service providers, with a distinct voting committee that includes one representative from each issuer and one representative from each listing exchange. The awards for the service providers completed voting in early February. The awards in this category include the following:

  • Index Provider of the Year – 2019
  • Index of the Year – 2019
  • ETF Liquidity Provider of the Year – 2019
  • ETF Custodian of the Year – 2019
  • ETF Law Firm of the Year – 2019
  • Best Online Broker for ETF-Focused Investors – 2019
  • Best ETF Platform – 2019
  • Best ETF Issuer Capital Markets Desk – 2019
  • ETF Investor of the Year – 2019

2019 Award Winners

LIFETIME ACHIEVEMENT AWARD ETF ISSUER OF THE YEAR
Reggie Browne Innovator ETFs
ETF OF THE YEAR NEW ETF ISSUER OF THE YEAR
Vanguard Total International Bond Index (BNDX) Tidal ETF Services (SoFi)
BEST NEW ETF, BEST NEW U.S. EQUITY ETF, BEST NEW ESG ETF MOST INNOVATIVE ETF ISSUER OF THE YEAR
iShares ESG MSCI USA Leaders ETF (SUSL) ARK
MOST INNOVATIVE NEW ETF BEST ETF ISSUER WEBSITE
Direxion MSCI USA Cyclicals Over Defensives ETF (RWCD) iShares
BEST NEW INTERNATIONAL/GLOBAL EQUITY ETF NEW ETF TICKER OF THE YEAR
Alpha Architect Freedom 100 Emerging Market ETF (FRDM) Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD)
BEST NEW U.S. FIXED INCOME ETF INDEX PROVIDER OF THE YEAR
Quadratic Interest Rate Volatility Inflation Hedge ETF (IVOL) Solactive AG
BEST NEW INTERNATIONAL/GLOBAL FIXED INCOME ETF INDEX OF THE YEAR
SP Funds Dow Jones Global Sukuk ETF (SPSK) Life + Liberty Freedom 100 Emerging Markets Index
BEST NEW COMMODITY ETF ETF LIQUIDITY PROVIDER OF THE YEAR
iPath Series B Carbon ETN (GRN) Jane Street
BEST NEW ALTERNATIVES ETF ETF CUSTODIAN OF THE YEAR
RPAR Risk Parity ETF (RPAR) US Bank
BEST NEW ASSET ALLOCATION ETF BEST ONLINE BROKER FOR ETF-FOCUSED INVESTORS
Strategy Shares Newfound/ReSolve Robust Momentum ETF (ROMO) Charles Schwab
BEST NEW SMART BETA OR FACTOR ETF BEST ETF PLATFORM
GraniteShares XOUT US Large Cap ETF (XOUT) Charles Schwab
BEST NEW ACTIVE ETF BEST INDEX PROVIDER WEBSITE
Avantis U.S. Equity ETF (AVUS) Alpha Architect
THEMATIC ETF OF THE YEAR BEST ETF ISSUER CAPITAL MARKETS DESK
Global X Cloud Computing ETF (CLOU) iShares
PEOPLE’S CHOICE ETF INVESTOR OF THE YEAR
ProShares S&P Dividend Artistocrats Technology ETF (TDV) CLS Investments
ETF HIDDEN GEM ETF LAW FIRM OF THE YEAR
VanEck Vectors Green Bond ETF (GRNB) Morgan, Lewis & Bockius

 

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