Behind The Impressive Growth Of Small ETF Issuers

March 20, 2017

Smart Beta As New Core Portfolio

Legg Mason, at No. 4, has been making a strong push into the smart-beta segment, vocally making the case for smart beta as the new core of portfolios. Smart beta is all the rage in the ETF market these days—a segment that’s gathering massive assets month after month. Legg Mason’s asset-gathering pace suggests it’s finding a following, although it’s still relatively small, at about $152 million spread over seven ETFs.

At No. 5, John Hancock has also been carving a niche in the smart-beta space, with a lineup of 12 multifactor funds slicing and dicing U.S. equity sectors, as well as a total market ex-U.S. strategy, the John Hancock Multifactor Developed International ETF (JHMD).

The firm has also put several ETFs on the commission-free Charles Schwab platform—a move that’s targeted at expanding distribution. Asset growth of 653% in one year suggests John Hancock is doing something right.

Common Threads

And so the story goes, down the list. Every one of these smaller ETF issuers has their own spins on a story that’s unique to each, but basically the same—a combination of good strategies, aggressive marketing and distribution and, sometimes, smart acquisitions in the ETF space.

If we were looking for signs from the universe or interesting parallels between this data and the big picture, we could say that the impressive success of the small guys in an ETF market dominated by giants is only fitting for an investment vehicle that prides itself in democratizing access to all investors across all sorts of assets. But that’s if we were looking for a story line.

Here, the numbers speak for themselves. Asset growth among ETF issuers is pretty widespread, with the big getting bigger, and the small getting bigger. And if projections of more and more investors turning to ETFs for their low cost, tradability and tax efficiencies all turn out to be true, these type of growth numbers could become more the norm than the exception.

Contact Cinthia Murphy at [email protected]


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