Assets in U.S.-listed exchange traded funds are expected to double by 2015, according to research from BNY Mellon and Strategic Insight.
According to the report, ETF assets will be around $2.1 trillion at the end of 2015, reflecting a growth rate of 16%, reports Jackie Noblett for Ignites. [ETFs Take on Popular Mutual Funds.]
“The next wave of growth for ETFs is being driven by new asset classes, new indexes and new ways to use ETFs as tools for portfolio construction,” said Joseph Keenan, head of global exchange traded fund services at BNY Mellon Asset Servicing, on ETF Daily News. “The ever increasing sophistication of these newly created ETFs can pose operational and distribution challenges for asset managers. However, with detailed planning and a focused strategy, a variety of innovative exchange-traded products can be brought to market to effectively meet investors’ needs.”
The ETF business has evolved beyond index funds tracking the major benchmarks such as the S&P 500. They offer exposure to a broad array of asset classes, including precious metals, commodities, currencies and alternative strategies. [ProShares Lists Hedge Fund ETF]
As a result, smaller ETF firms have been able to thrive by offering funds that fill a specific niche, for example. [ETF Usage Will Double By 2012: Survey]
BlackRock’s iShares takes about 44% of ETF market share in the U.S., followed by State Street which accounts for 24% of the business and Vanguard with 16%.
“Despite the concentration at the top of asset sized ranking, we have seen newer ETF providers make significant inroads, helped by innovative product, strong distribution capability, or lower costs. At mid-year 2011, there were 19 providers with at least $1 billion in ETF assets. Among them, five of these providers had less than $50 million of ETF assets a few years earlier,” according to Tom Graves for Market Scope, an S&P Equity Research report.
Tisha Guerrero contributed to this article.