“ETF OneSource continues to grow phenomenally as well,” Fischer added. “That $35 billion in flows I mentioned; a little over half of it has gone into ETF OneSource. About a quarter of our firm’s AUM is on ETF OneSource…. Clients continue to embrace commission free trades.”
Another booming segment of the ETF industry is rising popularity of smart beta or alternative index-based ETF strategies.
“The way we look at it is you know the first wave of ETF innovation really had been providing better building blocks,” Tony Davidow, Charles Schwab Investment Management, said. “So, fundamental indexing, which is a value oriented strategy has obviously done very well, which has a long history. It’s something Schwab is very passionate about. But strategies like low-vol and quality are also strategies that are really solving for specific needs of clients.”
The wave of smart beta ETFs allow investors and advisors to gain a better handle on market conditions as we are now able to hone in on targeted equity market exposure through factor-related ETFs, like quality and low volatility, to potentially enhance returns and diminish risk exposures.
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