Exchange traded fund providers are attracting huge inflows, propelled by the increasing popularity of low-cost, index-based investments. ETF investors can also capitalize on the growth in the space through the first ETF that focuses on companies and fund providers directly participating in the industry.
BlackRock (NYSE: BLK) attracted another $103.6 billion in the second quarter, adding to the largest trend in asset management as investors keep funneling billions into lower cost funds, often at the expense of traditional actively managed open-end funds, reports Sarah Krouse for the Wall Street Journal.
The new inflows was a quarterly record for BlackRock, with $73.8 billion flowing into its iShares ETF unit. BlackRock has seen its assets surge to $5.69 trillion, up 16% from the same time last year on the rising interest for index-based ETFs for a number of ways to craft a cheap and diversified investment portfolio.
“We are seeing more and more active investors using ETFs for active management,” Chief Executive Laurence Fink told the WSJ.
Fink also attributed the changing regulations governing retail investing and advice globally as major factors that have helped the money manager attract net new money.
The Labor Department’s fiduciary rule in the U.S. and the Markets in Financial Instruments Directive II in Europe are reshaping the investment landscape as more assets shift away from traditional portfolios managed by advisors and into a so-called model portfolio that includes a number of cheap ETF options.
“I do believe the changes in the ecosystem in retail are giving us accelerated flows,” Fink said.
Investors who are interested in tapping into the rising growth story of the ETF industry can look to the ETF Industry Exposure & Financial Services ETF (NYSEArca: TETF) as a way to play ETF providers. TETF tries to reflect the performance of the Toroso ETF Industry Index, which tracks publicly-traded companies that directly or indirectly provide services or support to ETFs, including management, servicing, trading or sales of ETFs.
Related: 10 Hugely Popular ETF Plays in July
These companies include ETF sponsors; asset managers; index providers; broker-dealers; securities exchanges; and service providers, such as custodians, transfer agents, and administrators, according to the prospectus. The ETF also includes a 6.4% tilt toward BlackRock.
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