ETF Growth Sparkles In July

August 08, 2019

Nevertheless, WMT—as a broad holding within ETFs—has been a positive allocation; let’s not forget that this company now embraced by value indexers is worth $312 billion and growing, by about 2-3% as year. Now that’s “ownership influence.”

In contrast, ETFs own 9% of Travelers, another very successful company, but with only a $38 billion market cap, the large cap trading flows may have a greater influence.

According to Bloomberg, the average trading volume for Travelers in July was only 838,000 shares, down from a range of 1.3 million to 2.01 million shares traded over this past year. In this context, we see the 9%—or about 23.4 million shares—as meaningful and something to watch.

 

ETF_Industry ThinkTank

(For a larger view, click on the image above)

 

[Use ETF.com’s stock finder tool to find an ETF’s allocation to a certain stock.]

 

Revenue Grows As Fees Fall

The average weighted expense ratio for U.S. ETFs remains the same, at 0.19% from June 30. Fee compression may be a slow continuum, but with increased assets, the projected 12-month revenue increased from $6.83 billion in January to $7.65 billion today.

The revenue also continues to diversify away from low-cost, traditional beta and toward nontraditional passive smart beta ETFs and active ETFs.

The percentage of ETF revenue from nontraditional passive ETFs in January was 36.38%; today it’s 38.99%. Active ETF revenue also gained market share, growing from 5.11% to 5.48%. These KPIs help show that investors are still looking for interesting and creative strategies to help diversify their portfolios.

 

 

 

Exchange Market Share Remains Constant

Exchange market share of ETF listings has remained constant in 2019, with NYSE in a dominant position. Cboe Global Markets, which owns ETF.com, took share away from Nasdaq, increasing from 13.26% of listings to 14.20%, while Nasdaq decreased from 16.68% to 16.17%.

 

 

Growth In Issuers Continues

The number of branded issuers continues growing this year, with three more since last month. Since the beginning of the year, ETF issuers have increased from 133 to 147. That’s an 11% increase, and we think an acceleration of more new asset managers who are embracing the superior structure of the ETF wrapper.

That said, the chart below from Morningstar Research shows assets remain concentrated with the top three issuers: BlackRock, Vanguard and State Street. Vanguard’s market expansion is coming at the expense of State Street’s and iShares’. We expect that innovations may draw flows in the billions, but broad low-cost access will remain in the hands of the few who have large-scale leadership.

 

Market_Shares_Major 1998_2019

(For a larger view, click on the image above)

 

Contact Dan Weiskopf at [email protected]

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