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Earlier this year, I put nearly 20 of my favorite ETF-related charts in a single spot.  Images are often more powerful than words.  Based on the response I received, I decided to compile some new favorites, all of which I’ve come across over the past several months.  Enjoy!

ETF Growth

First, an update on ETF growth:

Source: ETFGI

 

Financial Advisor Use of ETFs

One of the drivers of ETF growth has been financial advisors, who are using low cost ETFs to implement portfolio strategies.

Source:  Michael Kitces

 

Evolution of ETF Ownership

Institutional investors, including investment advisors, are a growing share of the overall ETF market.

Link:  Barron’s (note “retail investors” includes smaller investment advisors not required to report holdings via SEC Form 13F)

 

Why are Institutional Investors Increasingly Using ETFs?

Link:  Greenwich Associates

 

Characteristics of ETF Investors

Households owning ETFs tend to have higher incomes, greater financial assets, and more education than households owning mutual funds or individual stocks.

Source:  ICI

 

ETFs are Investment Vehicle of Choice for 72% of All Investors and 91% of Millennial Investors

Source:  Charles Schwab

 

While ETFs Have Grown Market Share, Mutual Fund Assets Have Ballooned as Well

Stock ETFs and index funds now represent nearly 50% of assets.  While losing market share, active mutual funds have actually benefited from a growing total pie – one fueled by a bull market.

Source:  Eric Balchunas

 

However…

That active mutual fund growth has been driven solely by market returns, not new investor money.

Source:  Eric Balchunas

 

Some Believe the Next Bear Market Will Spell Doom for ETFs

But if history is any guide, another sharp stock selloff will likely only further fuel the rise of ETFs and create real headaches for active mutual funds.

Source:  Bianco Research

 

Why Might a Bear Market Cause Headaches for Mutual Funds?

Fees.  A falling stock market would provide an opportunity for investors with current taxable gains to sell expensive mutual funds and move to lower cost, passive ETFs.

Link:  Morningstar

 

Fees are Big Business

But ETFs represent just 3% of total industry fees paid by investors.  All passive funds represent only 6%.

Link:  FT

 

Big Business – Exhibit “A”

A single mutual fund company, Fidelity, generates more than twice the revenue of the entire ETF industry!

Source:  Eric Balchunas

 

Meanwhile, ETF Fees Continue Falling

Competition continues to drive down ETF costs.

Link:  Wall Street Journal

 

ETF Competition is Fierce…

Link:  Morningstar’s Ben Johnson

 

Particularly, Among the “Big Three” ETF Providers

The ETF industry is top heavy, with the three largest providers accounting for 80%+ market share – which has evolved over time.

Link:  Wall Street Journal

 

ETF Chart Crime

The largest providers have the largest ETFs.  I created a Michael Batnik-esque chart showing the AUM of the top 5 ETFs = $688,731,065,734, while the AUM of ETFs #125 – 500 = $690,591,535,066.  The AUM of the bottom 2,034 ETFs = $687,952,849,033.

Source:  Nate Geraci

 

Some Worry There are Too Many ETFs

Perspective is important.

Source:  Forbes

 

While ETF Assets Have Grown Significantly, ETFs Represent a Small Fraction of the Total Stock Market

Worries that ETFs are driving the stock market are clearly overblown.

Link:  Sam Ro

 

But Additional Growth is Expected…

iShares believes global ETF assets could reach $12 trillion over five years.

Link:  iShares

 

Potentially, Mammoth Growth

State Street believes global ETF assets could hit $25 trillion by 2025.

Source:  Bloomberg TV