ETF Providers

The exchange traded fund business has been evolving through product innovation and marketing — however, a new order is taking shape. A focus on service and solutions is evolving, with providers creating higher quality products at the best possible price.

“How will the rest of the next wave of traditional asset managers looking to finally make a move to ETFs handle the market? What kind of hoops will they jump through to get your interest? We should find out soon enough as companies like T.Rowe Price, Alliance Bernstein, and Federated Investors have passed the hurdle of ETF approval from the SEC,” Ari Weinberg wrote for Forbes. [S&P Ranks Largest ETF Managers]

2012 was a record year for the ETF business. U.S. inflows hovered around $200 billion last year, and a record amount of new assets under management were recorded. However, there was also a record number of ETF closures last year. There were about 127 ETFs de-listed as of November 2012. The record amount of closures is actually a positive for investors because it will force providers to really tighten up their game. [ETFs: Behind the Scenes]

“In an industry that continues to see the amount of inflows that it has, the closures are a sign of health in the long run, because sponsors are focusing on products that show growth potential; products that may be unique in orientation such as advanced indexing—those outside of traditional market-cap-weighted strategies—or actively managed or solutions-oriented,” David Mazza said in a recent Index Universe interview. [ETFs Attract Record Annual Inflows]

Existing ETF providers have had to step up their game. Here are a few highpoints:

  • Charles Schwab did not launch any new funds in 2012; Total assets grew 70% , closing out 2012 with $8.6 billion in ETF assets.
  • Fidelity Investments is entering into the ETF market, according to recent filings with the SEC. Many are expecting to see the same pattern that Schwab displayed when entering the ETF business, reports Weinberg.
  • Vanguard introduced one new ETF in 2012, and gained $53 billion in inflows within 65 funds trading.
  • Vanguard grew assets per each ETF on average by 42%. Some argue that iShares and State Street introduced several new ETFs that are taking some adjusting time.
  • ProShares, a provider known for leverage, saw an asset decrease 8.1%, with $450 million dispersed across 139 ETFs.
  • Pimco’s asset base grew 128%, with $9.1 billion in ETF assets. Most of this growth is attributed to the PIMCO Total Return ETF (NYSEArca: BOND).
  • WisdomTree Investments grew assets 51%, while PowerShares closed out 2012 with 31% more assets.

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.