BlackRock executives say there are several different distinct user groups of ETFs.
“First are active capital markets participants who need deep liquidity and derivative capabilities. Second are those who look to ETFs for precise specialized exposure. And third are those who are buy and hold investors and broad core exposures,” said BlackRock President Robert Kapito during the firm’s recent quarterly earnings call. [BlackRock ETF Fee Cuts Target Buy-and-Hold Investors]
The recent fee cuts are mostly about the largest firms battling for market share among long-term investors.
“It appears U.S. investors, at least, are taking the view that it is not worth paying for active managers to make decisions on which stocks to buy or sell and prefer just to own the market, especially when market access comes at such a low price,” the FT reports.
Meanwhile, traders are increasingly tapping ETFs to trade entire sectors rather than buying individual companies. [Traders Using ETFs in Place of Individual Stocks]