ETF Industry 2019 Halftime Report

July 08, 2019

Revenue Grows While Fees Continue To Decline

The average weighted expense ratio for U.S. ETFs has dropped this from 0.20% to 0.19%. However, due to increased assets, the projected 12-month revenue from expense ratios has increased from $6.83 billion in January to $7.63 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 39.26%. Active ETF revenue also gained market share, growing from 5.11% to 5.42%. These KPIs help show that investors are still looking for interesting and creative strategies to help diversify their portfolio.

 

 

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 took share away from Nasdaq, increasing from 13.26% of listings to 14.11%, while Nasdaq decreased from 16.68% to 16.08%.

 

 

Growth In Issuers Continues

The number of branded issuers continues growing this year, from 133 to 144 as of June 30, 2019. That’s an 8.2% increase, and consistent with the number of new asset managers 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. It appears that, for the most part, Vanguard’s market expansion is coming at the expense of State Street and iShares, and not from other ETF issuers.

 

For a larger view, please click on the image above.

 

Contact Dan Weiskopf at [email protected]

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