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U.S.-Listed ETF Assets Top $2 Trillion

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Assets invested in U.S.-listed exchange-trade funds/exchange-traded products reached the $2 trillion milestone.

ETFGI is reporting that, as of Dec. 22, ETP assets have increased 18% this year from $1.698 trillion to $2.007 trillion based on positive market performance and net new assets.

David Mazza, head of research for SPDR ETFs and SSgA Funds at State Street Global Advisors, put into context how significant this milestone really is.

“It took 18 years for ETFs to reach $1 trillion and three years for it to reach the additional $1 trillion, with the $2 trillion that has been achieved today,” Mazza said in an interview with ThinkAdvisor. “We can see in real time, a ramp up in growth which highlights how more and more investors have come to embrace ETFs as not just a niche product but one that plays a prominent role in the construction of portfolios.”

According to ETFGI, the U.S.-listed ETF/ETP industry has gathered a record setting $232 billion year-to-date in net new assets beating the prior full year record of $190 billion in 2013. In November, the Investment Company Institute reported the combined assets of the nation’s exchange-traded funds (ETFs) were $1.889 trillion as of the end of October. Current data has yet to be released from ICI.

“This is one of the strongest years for ETF growth on record, and most likely when we head into the final days of 2014 we’ll close the books on ETF flows being the strongest that we’ve ever seen,” said Mazza in the interview.

Mazza considers investor sentiment after global financial crisis as a primary driver in the uptick in growth.

“The financial crisis has a lingering impact that we continue to see today,” he said. “Investors began to look for products that delivered them cost efficiency, transparency and liquidity – of which ETFs by their very nature do.”

For investors looking to access not just the equity market but also the fixed income market or different subsections of the market, Mazza said there are now ETFs which are liquid and low-cost enough for them to do so.

And 2014 has certainly seen strong growth in both equity and fixed income ETFs, which Mazza added “is particularly unique about this year.”

“In a rising market, one might think that equity ETFs would be dominant – and on a pure assets level through the end of [Monday] taking in $170 billion – they’ve certainly been quite strong,” he said. “But fixed income ETFs continue to see interest and are now at $57 billion year-to-date, bringing their assets to $316 billion. And that’s across only 271 products.”

Mazza expects to see continued growth in the future.

“The switch in mindset over the past few years of eTFs purely as a tactical vehicle toward one that can be strategically owned or used in a rotational strategy has been a major driver of interest and one that’s going to propel ETFs to additional milestones in the future.”

— Related on ThinkAdvisor: Fixed Income Outruns Equities in August ETF Flows


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