The proverbial they say “the rich get richer” and that is often true of the exchange traded products industry where BlackRock’s (NYSE: BLK) iShares, State Street’s (NYSE: STT) State Street Global Advisors and Vanguard control a significant portion of total U.S. ETF assets under management.
In terms of individual ETFs, bigger does not always mean better, a sentiment that has been empirically documented across a broad swath of sectors and asset classes. [Bigger Not Better for This ETF]
Of course, there are instances where some of the largest ETFs do deliver solid returns for investors. The PowerShares QQQ (NasdaqGM: QQQ), the NASDAQ-100 tracking ETF, is a fine example. Not only is QQQ up nearly 14% this year, a gain that outpaces the S&P 500 by about 460 basis points, but QQQ is one of the top-performing big ETFs over extend time frames as well. [NASDAQ ETFs Lead the Way]
QQQ, the sixth-largest U.S. ETF with almost $46.4 billion in assets under management, “has produced the best 10-year return, coming in at an average annual 12.10%. The tracker of the 100 biggest nonfinancial stocks traded on the Nasdaq composite has climbed an average annual 27.02% the past three years and 21.19% the past five years,” reports Doug Rogers for Investor’s Business Daily.
QQQ is not alone in its status as solid behemoth performer. Helped by Warren Buffett’s that everyday investors would be best served owning a low-cost Vanguard index fund, the Vanguard Total Stock Market ETF (NYSEArca: VTI) has become one of the five largest U.S. ETFs in terms of AUM.
VTI has added over $4 billion in new asset this year, a total surpassed by only three other ETFs, including two Vanguard funds. VTI also charges just 0.05% per year, making it less expensive than 95% of competing products. Well those superlatives are sure to attract investors, the truly important fact is that VTI “is shy of a 10% average annual gain for 10 years with 8.99%, according to IBD. [Vanguard’s Rise]
The Vanguard REIT ETF (NYSEArca: VNQ), the largest U.S. industry ETF and ninth-largest ETF in the U.S. overall, has nearly doubled over the past five years. VNQ has also rebounded nicely this year after lagging the broader market in 2013, surging 18.6% as REIT ETFs have been bolstered by falling 10-year Treasury yields. Only four ETFs surpass VNQ’s nearly $3.7 billion in 2014 inflows.
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of QQQ.
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.