AROUND THE WORLD OF ETFs

October 19, 2010

Vanguard Trumps iShares In Adviser Loyalty
Vanguard is increasingly popular among investment advisers, outranking iShares for the first time to become the most popular ETF provider in terms of adviser loyalty, a study from Cambridge, Mass.-based Cogent Research showed. The firm surveyed 1,560 investment advisers.

According to the 2010 Advisor Brandscape report compiled by the market research firm, advisers who use Vanguard ETFs are more committed to the brand than those using iShares products. John Meunier, a Cogent principal, noted that Vanguard is the only top-five ETF provider to grow its market share over the past year.

iShares still outperforms Vanguard in the range of products it offers, Meunier said, but Vanguard outperformed its competitor in just about every other category Cogent measures, especially in “aspects of service and client experience.”

State Street and Pimco ranked third and fourth place among advisers, respectively.

Alerian Debuts First-Ever MLP ETF
In late August, MLP research firm Alerian launched the first ETF to tap into the MLP space. Previously, investors seeking access to the asset class could only do so through various ETNs offered by JP Morgan, UBS and Credit Suisse.

The Alerian MLP ETF (NYSE Arca: AMLP) tracks the Alerian MLP Infrastructure Index, and charges an annual expense ratio of 0.85 percent.

Alerian also says that the ETF will retain the tax benefits of MLP distributions. MLPs are typically a nightmare to hold in a fund setting since funds are typically taxed as registered investment companies, which may only invest 25 percent of their assets in MLPs before becoming subject to various tax penalties. AMLP has elected to be taxed as a corporation, which helps it get around this restriction.

ALPS Advisors is AMLP’s distributor, with Arrow Investment Advisors serving as its subadviser.

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