Exchange traded funds are widely used as efficient investment vehicles to capture specific or broad market moves. This aspect has not gone over the heads of money managers, who are including ETFs into their investment portfolios, even products created by their competitors, according to a recent report.
BlackRock (NYSE: BLK), the parent company of the iShares ETF unit, is one of the largest users of other providers’ ETFs, writes Randy Diamond for Pensions & Investments. [Managed ETF Portfolios]
BlackRock invested $8.9 billion in 98 ETFs at the end of 2011, with $2.8 billion in other firms’ products, including $1.7 billion in State Street’s ETFs, $436.2 million in Vanguard, $410.3 million in ETF Securities, $176.4 million in Van Eck Global, $52.1 million in Sprotts Asset Management, $22.5 million in Invesco PowerShares and $1.1 million in WisdomTree.
PIMCO is the second largest money manager to use other firms’ ETFs. The company had $2.9 billion invested in ETFs at the end of last year, with $2.1 billion from other companies’ funds, including $1.2 billion in the Vanguard Emerging Market ETF (NYSEArca: VWO) and $893.7 million in SPDR Gold Shares ETF (NYSEArca: GLD).
SSgA held $4.3 billion in ETFs, with $1.9 billion from other providers’ products, including $990 million in BlackRock, $860.4 million in Vanguard, $28.9 million in Powershares, $9.4 million in PIMCO and $3.2 million in Van Eck.
““We would use ETFs because they are a liquid, cost-effective way to gain exposure as opposed to buying all of the direct, physical securities, which could take more time and complexity,” Daniel Farley, senior managing director and chief investment officer at SSgA, said in the article.
Vanguard held $78.5 million in the SPDR S&P 500 ETF (NYSEArca: SPY), despite offering a similar product, the Vanguard S&P 500 ETF (NYSEArca: VOO).