The exchange-traded funds business has come a long way since 1993, when the first SPYDER S&P 500 ETF was issued on the American Stock Exchange.
What was at first a curiosity has grown into a $1.8 trillion business, which represents 12% of the total net assets of the managed by long-term mutual funds, ETFs, closed-end funds, and unit investment trusts. There are scores of ETF providers, but the rankings are top-heavy. BlackRock iShares, the biggest player in the space, has more than 700 ETFs globally, covering more than $1 trillion in assets under management. State Street and Vanguard also have massive ETF businesses.
BlackRock has been in the ETF market since it started. “iShares helps clients around the world build the core of their portfolios, meet specific investment goals and implement market views,” the company says on its website. “iShares consistently delivers quality funds that clients globally rely on to invest for the future. iShares harnesses the insights and experience of Blackrock, trusted to manage more money for investors than any other firm in the world.”
iShares Core S&P 500 ETF has $69 billion in assets, which by itself would rank as the world’s 5th-biggest ETF provider behind Invesco PowerShares. The $24 billion iShares Aggregate Core U.S. Bond ETF is the company’s biggest bond ETF, while the $6.3 billion iShares Core MSCI Emerging Markets ETF is the largest international-stock ETF.
As one would expect from a company of Blackrock’s breadth, there is no shortage of choices for ETF investors. Among the more esoteric offerings are the iShares MSCI Europe Minimum Volatility ETF, the iShares Asia Developed Real Estate ETF, and the iShares International Preferred Stock ETF.
iShares also provides thought leadership on a wide range of topics pertinent to ETF investors.
“Cash-rich, mature tech companies may take actions designed to help unlock shareholder value,” Global Investment Strategist Heidi Richardson wrote in a Jan. 16 piece, suggesting consideration of the iShares U.S. Technology ETF. “The sector seems to be poised to withstand rising rates and benefit from growing capital expenditures.”
In a Nov. 7, 2014 piece topical to the iShares MSCI Japan ETF and the iShares Currency Hedged MSCI Japan ETF, Richardson wrote “Japan is one of the few developed market countries with attractive valuations. Potential near-term catalysts could drive stock performance and flows.”
Last year was a strong year for ETFs broadly, as there was significant asset growth and an expanding base of users drawn to the sector’s transparency, increased liquidity, trading efficiency and access to markets.
In 2015, ETF expansion is expected to continue, though possibly at a slower rate than in recent years because the industry is moving toward maturity. More investors will use ETFs, and the sector will also be supported by wider adoption by financial advisors, the continued emergence of ‘smart’ beta, and more appetite for low-volatility products.
Geographically, Canada, Europe, and the Asia-Pacific region are considered fertile ground for ETF growth, as adoption rates lag behind the U.S