ETF Providers: Who’s Who?
January 25th at 6:00am by Tom Lydon
As the exchange traded fund (ETF) industry surges in assets ($705 billion at the end of 2009) and number of funds offered (772), it’s also surging in the number of providers selling those funds. Who’s who?
But first, let’s tackle the question: why should you know your providers? No two ETF providers are created equally. Differences can range from:
- Index construction methodology
- Expense ratios
- Types of funds offered
- The provider’s expertise in a particular area
Investors can use this information to their advantage and capitalize on the increased competition. Without further ado, here are some of the biggest ETF providers around today. Note that all numbers are as of December 2009 and the major providers are listed in order of size.
- Largest ETF provider in the world and the U.S.
- 186 ETFs
- $364 billion in assets
- 51.7% of the total ETF market in the U.S.
- iShares is known for a varied and large product lineup – single-country funds, asset class funds, bonds
- Acquired by BlackRock last year [Read about the deal here.]
- We may see more active management from them in the future – BlackRock is already one of the world’s biggest asset managers [What are BlackRock's plans?]
- 88 ETFs
- $149 billion in assets
- 21% of the U.S. ETF market
- State Street is largely known for sector funds that are plays on the S&P 500 sectors, as well as a varied fixed-income lineup ranging from plays on junk bonds to Treasuries
- Provides two of the most actively traded ETFs in the world: SPDRs (NYSEArca: SPY) and SPDRs Gold Shares (GLD)
- 46 ETFs
- $92 billion in assets
- Vanguard’s market share increased 4% last year – the most of any other provider. In fact, no other provider increased its market share by more than 1% in 2009
- Vanguard may be best known for its rock-bottom prices; they’re among the lowest in the industry
- 106 ETFs
- $33 billion in assets
- PowerShares has a diverse set of offerings: plays on global sectors, commodities, alternative energy, emerging markets
- Provides the PowerShares QQQ (NASDAQ: QQQQ), one of the world’s largest ETFs
- Was the first provider to launch actively managed ETFs and has five available
- 78 ETFs
- $23.2 billion in assets
- ProShares is known for its line of leveraged and inverse funds; they were the first provider to create these ETFs
- ProShares’ leveraged and inverse funds offer plays on anything from asset classes, global regions and sectors
- 23 ETFs
- $12.5 billion in assets
- Known for intriguing niche ETFs: broad and single-country frontier/emerging market plays, and sector plays on nuclear, steel and solar power
- Van Eck is also active in the muni bond ETF space covering a range of the risk/return spectrum
- 52 ETFs
- $6.5 billion in assets
- Known for their dividends strategy, building funds by looking at companies that pay dividends and weighting accordingly; the funds cover emerging markets, sectors and asset classes
- WisdomTree also offers currency ETFs, which don’t hold actual currency but invest in either non-U.S. money market securities or a combination of money market instruments designed to give exposure to non-U.S. money market securities rates
- Their senior investment strategy advisor is Wharton Professor Jeremy Siegel
- 26 ETFs
- $5 billion in assets
- Known for their triple-leveraged ETFs that offer plays on everything from emerging markets to specific sectors indexes and Treasuries [What's the beef with leveraged ETFs?]
- 31 ETFs
- $3.1 billion in assets
- Known for leveraged and inverse ETFs that give plays on asset classes, indexes and sectors
- Also known for its equal weighting strategy on a variety of sectors and the S&P 500
- Has a popular line of currency funds (CurrencyShares), as well
- 32 ETFs
- $2.9 billion in assets
- Was recently acquired by Guggenheim
- A “niche” ETF provider, offering plays on shipping, airlines, solar power, water, frontier markets
- Guggenheim relationship could have them also offering funds different from what they currently offer
- Has filed for some active commodity ETFs, for which there has been investor demand
New Providers and Honorable Mentions
- ETF Securities – made a splash with investors just recently by launching the United States’ first two physically-backed platinum and palladium ETFs. Last year, the provider launched a pair of popular physically-backed gold and silver ETFs, as well.
- First Trust - has a variety of funds targeting sectors, size/style, niche funds and funds with global exposure. They’re also known for their quantitatively-driven AlphaDEX funds.
- Charles Schwab – made a splash with commission-free trades of its ETFs on their platform; also lowered commissions on non-Schwab ETFs to lure more investors. Their initial ETFs are primarily plays on asset classes. [Why Schwab could open doors.]
- PIMCO – a giant in the bond industry; rolled out seven ETFs last year. Their offerings range from plays on Treasuries, TIPS and two actively managed funds focusing on muni bonds and short-term investment-grade securities. [PIMCO's plans.]
- Emerging Global Shares – released the first of a growing line of sector-based emerging markets funds, offering plays on technology, energy and metals and mining in developing countries.
- AdvisorShares – offers one ETF, the DENT Tactical ETF, which is an actively managed ETF of ETFs that chooses funds based on demographic analysis; has other actively managed funds in registration.
- Grail Advisors – offers a line of actively managed ETFs, including four that have single managers; coverage areas range from growth, large-cap, technology and financials.
- RevenueShares - offers funds that track indexes weighted by revenue. Their current offerings target asset classes and the financial sector, among others.
- Global X - offers funds focused on far-flung international markets, such as the Nordic region, Colombia and a variety of sectors in China.
- IndexIQ - has funds that focus on hedge fund replication, the first such funds to do so.
- Jefferies – has a line of equity-based funds focused on agriculture, energy wildcatters (small- and mid-cap oil and natural gas companies) and industrial metals.
- FaithShares – launched the first faith-based ETFs for a variety of beliefs, from Catholic to Baptist.
- OOK Advisors – launched the first state-based ETFs focusing on Oklahoma and Texas.
- Others looking to enter the business include: T. Rowe Price, Hancock, Goldman Sachs, Putnam, TD Ameritrade
Read the disclaimer, as Tom Lydon is a board member of Rydex|SGI.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.