For ETF Value Creators and Destroyers, Size Matters
State Street’s SPY tops the list of value creators, while ETFs from ProShares and ARK lost the most value, according to Morningstar.
Which funds become the top creators of value, as well as the biggest destroyers, appears to be a matter of the issuer's size.
Over the 10 years through Dec. 31, 2024, the $608 billion S&P 500 ETF Trust (SPY)—the world’s largest ETF that decade—has generated $351.9 billion of shareholder value, the most among exchange-traded funds, according to a Morningstar report published in January. State Street’s SPDR unit is the world’s third-largest ETF issuer, with $1.5 trillion in assets.
On the flip side, the $2.1 billion ProShares UltraPro Short QQQ (SQQQ) has shed $10 billion in shareholder value over the same period, according to a Morningstar survey published March 18. While ProShares' $70.7 billion in assets puts it in the 12th spot in our etf.com League Tables, SPDR’s assets are 20 times greater and those of iShares, the biggest ETF brand, are 45 times the size.
This is due to inherent advantages the larger funds hold, Morningstar analysts Amy Arnott and Jeffrey Ptak wrote in the study. Gargantuan size creates a “positive feedback loop of size and performance: Strong performance attracts more assets, which in turn means the biggest fund shops have the most impact on wealth creation in dollar terms.”
The smaller firms, they wrote, are “still large enough for losses to generate a major impact in dollar terms.”
Wealth Creators and Destroyers
The biggest ETF wealth creators—the survey ranked 15 mutual funds and exchange-traded funds together—were the $542.1 billion iShares Core S&P 500 ETF (IVV), which generated $263.1 billion, and the $303.3 billion Invesco QQQ Trust (QQQ), creator of $195.2 billion of shareholder value.
On the value destruction side, the second-largest figure was the $7 billion wrecked by the $231.2 million ProShares Ultra VIX Short-Term Futures ETF (UVXY), followed by $7 billion in lost value from the $5.5 billion ARK Innovation ETF (ARKK).
In addition to the value-losing funds’ issuers simply not having the scale of their larger cousins, they’ve also timed their launches as market conditions worsened or they’ve simply lost when higher risks were taken, the authors said.
“Many of the firms on our list have lineups that are heavy on specialized and volatile categories, such as commodities, natural resources, and emerging markets—areas that failed to enhance shareholder value during most of the decade covered in our study. KraneShares, Barclays, and Global X are three examples of this trend.”
