Passive, Low-Cost ETFs Attract Record Inflows

“In 2016, it is fair to say across all investor types there was a movement more toward passive strategies,” Chief Executive Officer Laurence D. Fink told Bloomberg. “When I am able to increase margins and increase market share through price cuts I am going to do that. The key element is scale.”

Larger players like BlackRock are capable of cutting fees on a number of its products due to their huge scale as many of their ETFs are among the largest available in each respective asset category.

In recent weeks, ETFs have also attracted huge inflows following Donald Trump’s presidential election win as investors bet on expansionary economic policies under the new Trump administration. Over half of the new ETF inflows went into products with an average fee of 0.09% or less, according to Bloomberg Intelligence.

There are now U.S.-listed 1,978 exchange traded products, which include both ETFs and exchange traded notes, with $2.6 trillion in assets under management and an average expense ratio of 0.57%. The cheapest ETF options include broad U.S. stock strategies with a dirt cheap 0.03% expense ratio, including the iShares Core S&P Total US Stock Market ETF (NYSEArca: ITOT), Schwab U.S. Large-Cap ETF (NYSEArca: SCHX) and Schwab U.S. Broad Market ETF (NYSEArca: SCHB).

For more information on ETF flows, visit our ETF Performance Reports category.