Daniel Loeb, the American hedge fund manager, postulated earlier this year that BlackRock was a “misunderstood franchise” that was being “valued like a traditional asset manager” when ETF players are acting like “oligopoly businesses with faster growth and much higher incremental margins than traditional asset management — and thus deserve much higher P/E multiples over time”.
With the ongoing demand of ETFs steadily increasing and the rising usage of ETFs as a core component of many investment portfolios, the ETF industry and others associated with the rise of ETFs may continue to grow.
Meanwhile, 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.
Company components found in the underlying index 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 6.6% tilt toward BlackRock, along with other companies heavily involved in the ETF industry like WisdomTree Investments 7.2%, Charles Schwab 6.8%, BlackRock 6.7%, CBOE Holdings 6.6% and Invesco 6.2%, among others.
For more information on ETFs, visit our ETF Performance reports category.