ETF Growth Vacations In August

September 12, 2019

The ETF Think Tank is a community of advisors focused on a client-centric approach to investing through the use of ETFs. Each week we disseminate research on the growth of the ETF industry including key performance indicators (KPIs) on number of ETFs listed, assets, revenue, exchange market share and number of issuers. This data is useful in serving to monitor the trends in the ETF ecosystem. ETF Think Tank produces this monthly report for ETF.com.

 

Fixed Income August’s Flow Story

It was clear from ETF flows that investors and/or traders were concerned about a risk of recession. However, we caution that ETFs flows can reflect short-term tradability and liquidity for decision makers, so they can be misleading at times.

Unless you know the who and the why, you can’t always be certain about the impact and the reason. From an ecosystem perspective, the trend toward investors embracing more fixed income ETFs makes a great deal of sense.

The first bond ETF was launched July 26, 2002, by BlackRock’s iShares, roughly a decade after the first equity ETF.

(An ETF Nerd challenge: Why were the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD) and the iShares 20+ Year Treasury Bond ETF (TLT) launched before the iShares Core U.S. Aggregate Bond ETF (AGG) on Sept. 22, 2003? Maybe Mathew Tucker at BlackRock knows?)

Either way, it sure didn’t hurt the success of AGG, which today sports $65.8 billion in assets under management.

Closures Quietly Eclipse Launches

With only four new launches occurring in August, ETF Nerds will not be surprised to read that closures exceeded launches in the month and led to the total number of U.S. ETFs declining to 2,278 from 2,288.

Over the past 12 months, the number of listed ETFs is still up 7.7%, while 242 launches versus 167 closures of 167 means that the open-to-close ratio softened further to 1.45. Seasonality influences new launches, and we have already seen four launches in September.

Assets Down, Average Expense Ratio Steady

As of Sept. 1, 2019, U.S. ETF assets also declined to $3.968 trillion, a sequential decline of 1.49% from the record month-end high of $4.028 trillion.

Another KPI measures revenues derived from expense ratios. That showed a slight decline sequentially to $7.45 billion from $7.68 billion. The average expense ratio remained steady at 0.19%, buoyed by nontraditional and active ETFs.

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