ETF Leader Board Shaken Up

November 12, 2018

Schwab & First Trust Climbing The Ranks

At Schwab, the $24 billion of net inflows thus far in 2018 have positioned the industry’s No. 5 provider to match or exceed its $28 billion of new money a year ago. Yet the share of net inflows is more than double that of its total asset base. As at iShares and Vanguard, bond ETFs have been a major driver of creations.

The Schwab U.S. TIPS ETF (SCHP) and the Schwab Intermediate-Term U.S. Treasury ETF (SCHR) pulled in $5 billion combined year-to-date, more than triple what they gathered in all of 2017. Schwab has also continued to see interest in its low-cost equity products, including the Schwab International Equity ETF (SCHF).

Meanwhile, First Trust’s $11 billion of net inflows was more than double what the asset manager’s 2% market share would suggest.

Demand for short-term bond ETFs again played a role here, with the actively managed First Trust Enhanced Short Maturity ETF (FTSM) doubling the inflows from last year to $1.6 billion. Flows into the sector-oriented First Trust Dow Jones Internet Index Fund (FDN) and the First Trust NYSE Arca Biotechnology Index Fund (FBT) also exceeded $1.5 billion, easily surpassing the prior year’s demand.

JP Morgan The Year’s Star

Though Schwab and First Trust have gained in prominence in 2018, J.P. Morgan has crashed the ETF party, leveraging its scale as one of the largest active asset managers.

J.P. Morgan launched its first ETF in 2014, but this year the firm emerged as a key player. Nearly $11 billion of its $16 billion in total ETF assets came in the door in 2018, with the inflows heavily concentrated in one actively managed short-term bond ETF and two low-cost international equity ETFs.

The JPMorgan Ultra-Short Income ETF (JPST), which just launched in May 2017, gathered $3.2 billion of new money in the first 10 months of 2018. Not far behind JPST in asset gathering this year has been low-cost single-country ETFs. The JPMorgan BetaBuilders Japan ETF (BBJP) and the JPMorgan BetaBuilders Canada ETF (BBCA) added $2.4 billion and $2.1 billion, respectively, this year. Both launched in mid-2018 and carry a modest 0.19% expense ratio.

While the ETF pie continues to swell in 2018 and is likely to continue growing, more moderately sized ETF players have grabbed additional slices, aided by their lower-risk fixed-income offerings and lower-cost international equity offerings.

At the time of writing, neither the author nor his firm held any of the securities mentioned. Todd Rosenbluth is director of ETF and mutual fund research at CFRA, an independent research firm that acquired S&P Global Market Intelligence's equity and fund business in October 2016. He can be reached at [email protected]. Follow him on Twitter @ToddCFRA.

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