Top of the Food Chain: A Look at the 5 Largest ETFs

November 21st at 8:31am by Tom Lydon

The ETF business is top-heavy in terms of the biggest funds and the largest providers’ market share.

Together, the three biggest ETF sponsors — BlackRock’s (NYSE: BLK) iShares, State Street (NYSE: STT) and Vanguard — control more than 80% of the industry’s assets.

The U.S. marketplace is comprised of 1,443 exchange traded products from 51 sponsors with $1.27 trillion in total assets, according to XTF.

The two largest ETFs, SPDR S&P 500 (NYSEArca: SPY) and SPDR Gold Shares (NYSEArca: GLD), together account for nearly $200 billion.

In ETFs, the rich seem to get richer because of the traditional first-mover advantage. Investors also tend to gravitate to the largest and most liquid funds. However, an ETF’s liquidity is influenced by other factors aside from trading volume. [ETF Liquidity More Than Just Trading Volume]

Index Universe recently rated the five largest ETFs trading and have come up with the following list, reported by Allan Roth for CBS MoneyWatch. [Stock ETFs Rally on Fiscal Cliff Deal Hopes, Bargain Hunting]

The largest ETF is the SPDR S&P 500, which is also the first ETF to trade. The fund has been trading since 1993 and has $98.83 billion in assets. The ETF is a pure large-cap play and tracks the S&P 500 Index. The second largest ETF is the SPDR Gold Shares with $73.93 billion in assets. This fund us ultra popular with investors because it is physically-backed and gives investors exposure to the precious metal without physical delivery. [Vanguard Emerging Market ETF Index Switch: What Investors Should Know]

Coming in third is the Vanguard MSCI Emerging Markets (NYSEArca: VWO) with $54.96 billion in assets. Next year the fund will track an FTSE Index versus the MSCI Index, omitting the South Korea allocation. This is one of the most affordable broad-based emerging market fund trading. Fourth is the iShares MSCI Emerging Market Index (NYSEArca: EEM) with $38.19 billion. The ETF tracks the same index as VWO, but charges 0.67%. The iShares MSCI EAFE Index (NYSEArca: EFA) comes in fifth at $35.6 billion, and tracks international developed markets. [A Look at Emerging Markets as Fiscal Cliff Looms]

There are other options for any of the five ETFs mentioned. These are just the largest funds by assets under management.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. 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.