Nº 3 The Big Boys Come To Market
The ETF industry grew up in a bit of a Vacuum. It was dominated in the early days by index geeks and investing purists looking to offer low-cost beta products in a convenient package. Barclays Global Investors, Vanguard, State Street and similar firms established dominant positions in the market.
But the industry is evolving. Today smart-beta strategies that bridge the active/passive divide are in the crosshairs of investors. Moreover, the industry has become too big for the established asset managers to ignore.
The next few months are shaping up to be a watershed moment for the industry, when large, established managers get into the market in a major way.
We've already seen this happen to some degree. Charles Schwab is now the 7th-largest provider of ETFs in the U.S., with $35 billion in assets, after a dead start a few years ago. Deutsche Bank has built up a $19 billion ETF business in the U.S. in a surprisingly under-the-radar way, while J.P. Morgan, Janus and others have all dipped their toes into the water.
But the floodgates are about to open. Goldman Sachs Asset Management has spent the past 12 months hiring every great ETF expert available on the market, and is said to have a significant budget supporting its pending entry into the space.
John Hancock, Manulife, Legg Mason and Preferred Financial, among others, are all looking to make some noise soon. And if you include exchange-traded managed funds, you have to add Eaton Vance, Gabelli Funds, Pioneer Investments, Hartford Funds and others are in the mix.
Those are big names, and they could all enter the market in the next 12 months. When you add them to the pile of people already talking about ETFs, you can see the pace of growth accelerate quickly.
Contact Matt Hougan at [email protected].