Seven new ETFs are coming to market Thursday, pushing total U.S.-listed ETFs above 1,500 funds listed for first time.
Seven new ETFs are coming to market Thursday—six fundamental strategies from Schwab, and an emerging market dividend fund from Emerging Global—pushing the total number of U.S.-listed ETFs above 1,500 for the first time.
Clocking in at 1,497 U.S.-listed funds as of today, Thursday’s launches will bump that number up to 1,503 ETFs. The milestone comes despite what has been a 40-percent-plus decline in the pace of launches year-to-date relative to the same period in 2012, and nearly twice as many fund closures so far in 2013 versus year-earlier figures.
There’s nothing particularly important about such a milestone, but round numbers can offer a good opportunity to look back and take measure of how far an industry has come. So far, 2013 has in fact been full of interesting milestones for the 20-year-old ETF industry.
For starters, January 2013 brought the 20th anniversary of the industry’s beginnings—the very first ETF, the SPDR S&P 500 ETF (NYSEArca: SPY), was launched in January 1993 and now ranks as the world’s largest, with some $130 billion in assets.
Also, the Sector SPDRs are turning 15 this year. The SPDRs were at the forefront of sector-specific investing, offering investors for the very first time the ability to hone in on sector exposure to the S&P 500 and express tactical views on the broad economy and on business cycles in a way they couldn’t before. Since inception, the suite of nine sector ETFs—which, combined, represent the S&P 500 as a whole—have amassed more than $70 billion in assets.
The SPDRs anniversary is also noteworthy in the sense that these funds claim to have been the very first ETFs to attract both institutional and retail investors alike, as ALPS’ Dan Dolan, one of the brains behind the funds, told IndexUniverse in a recent interview. Often, those two groups of investors don’t tread the same waters.
And it’s a growing demand from both of the groups, in particular institutional customers, that’s been driving the latest expansion of the ETF industry, some say. According to the Investment Company Institute, or ICI, institutional investors have found ETFs “a convenient vehicle for participating in, or hedging against, broad movements in the stock market” in recent years, ICI said on its website.
“Increased awareness of these investment vehicles by retail investors and their financial advisers also has influenced demand for ETFs,” it said.
ETF providers have been quick to meet that demand. It took roughly 14 years, from 1993 to 2007, for the market to reach its first 500 U.S.-listed ETFs, and only about three years after that to double that amount by 2010. Now, here we are at 1,503 funds just 2 ½ years later, and let’s not forget that around 300 ETFs have come and gone since 2001.