Behind The Impressive Growth Of Small ETF Issuers

March 20, 2017

Different Approaches

Each of these issuers has found success—or resonance with investors—with different approaches.

For example, in the case of Columbia, which a year ago had only $13 million in AUM, the bulk of its assets came via acquisition. Columbia bought Emerging Global Advisors last year—a firm that had about $865 million in ETF assets.

Today Columbia manages 14 ETFs, with combined assets of over $1 billion. The largest Columbia ETF, the Columbia Emerging Markets Consumer ETF (ECON), with $726 million, raked in $68 million in net inflows and rallied about 15% in the past year. Asset growth is a direct result of inflows and strong market performance. The best-performing Columbia ETF in the past 12 months, the Columbia India Small Cap ETF (SCIN), posted gains of about 40%.

The Principal Group, at No. 2, is known as a provider of 401(k) retirement plans, mutual funds and insurance. The firm first launched an ETF in the summer of 2015. And when it came into the space, it said it had vast access to institutional as well as retail clients, many of which were looking for ETFs. In other words, Principal had a sales and distribution plan in place right out of the gates.

Targeting Institutional Investors

That plan was to initially focus on registered investment advisors, and “eventually” move into national accounts over time, as well as get on various platforms and target institutional investors, according to Paul Kim, managing director of ETF strategy at Principal.

About a year and a half later, Principal is seeing solid asset growth. Today the firm has six ETFs with total assets of about $554 million. The largest Principal ETF, the Principal EDGE Active Income ETF (YLD), with $280 million in assets, was not only the firm’s best-performing fund in the past year, with gains of 17%; it also attracted $236 million in fresh net inflows in that period.

At No. 3, Exchange Traded Concepts, a third-party ETF issuer known for its “ETF-In-A-Box” concept, has been busy growing its roster of ETFs. In the past 12 months, the firm grew its lineup of ETFs by 35% with the launch of five new funds. Today ETC manages 19 ETFs, with $2.5 billion in assets.

 

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