The exchange traded fund universe continues to expand, and the U.S. is seeing some major, overarching themes starting to pop up.
“I think the themes that we’re seeing today or the themes that we’ve been seeing for years now, which is people moving towards keeping things simple, keeping things cheap,” Ben Johnson, Director of Global ETF Research at Morningstar, said at the 2018 Morningstar Invest Conference.
ETF investors and most market participants in general have been gravitating toward low-cost, passive index-based funds like ETFs. The industry is witnessing increased usage from institutions, financial advisors and retail investors.
“We’ve seen fee wars continue to edge ever closer to zero; big fee cuts recently from iShares; a recasting of a lot of SPDR ETFs into their portfolio series, which are uniformly low-cost now. The race to the bottom carries on,” Johnson added.
According to XTF data, there are now 2,153 U.S.-listed ETFs with $3.5 trillion in assets under management and an average expense ratio of 0.59%. The cheapest ETFs on the block now come with a dirt low price of 0.03%.
Furthermore, Johnson also pointed to a growing trend to build full investment portfolio solutions with targeted ETF plays, pointing to the growth in the ETF strategist landscape and ETF managed portfolios that are comprised of ETFs.
“A movement away from sort of à la carte sales of slice of the pie – my S&P 500 index fund is better than your S&P 500 index fund – and a pivoting towards selling whole pies,” Johnson said.
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