Wednesday, September 12, 2012

As New ETFs Come and Go, Big Ones Remain Big

By Tim Husson, PhD and Olivia Wang, PhD

A recent Seeking Alpha article argues that with six new ETFs coming into the market and 18 being closed or redeemed, the past August signaled the beginning of a consolidation process in the ETF industry. There are good reasons to believe the author is right: with ETF issuers rolling out more and more ETFs each month, those having failed to catch investors’ eyes quick enough are bound to disappear with the ever-intensifying competition. On the other hand, it also got us curious: what about the winners in the ETF industry? Has there also been turnover at the top?

The answer turned out to be no, at least over the past four years. The table below lists the ten largest ETFs by total assets as of September 7, 2012.* The table also includes each fund’s total assets for the previous three years. SPY, the SPDR S&P 500 ETF, has been the largest ETF by total assets in all four years. Its share of the overall ETF industry have also been relatively stable: 8.3% for September 2012, 8.4% for September 2011, 7.7% for September 2010, and 10.8% for September 2009**.

 Ticker Name Total Assets (MM) Sep 2011 Sep 2010 Sep 2009 SPY SPDR S&P 500 ETF TRUST $102,871$88,939 $63,161$72,585 GLD SPDR GOLD TRUST $68,320$71,825 $52,159$32,606 VWO VANGUARD MSCI EMERGING MKT $53,537$45,437 $30,346$11,537 EFA ISHARES MSCI EAFE INDEX FUND $35,067$35,440 $32,097$33,283 QQQ POWERSHARES QQQ NASDAQ 100 $35,025$22,184 $15,802$16,370 EEM ISHARES MSCI EMERGING MKT IN $33,993$33,496 $39,767$30,268 IVV ISHARES S&P 500 INDEX FUND $30,414$26,314 $20,906$19,814 LQD ISHARES IBOXX INV GR CORP BD $24,121$14,659 $14,370$12,970 TIP ISHARES BARCLAYS TIPS BOND $22,995$20,658 $20,590$15,405 VTI VANGUARD US TOTAL STOCK $22,488$18,720 $13,628$11,880

The list of the ten largest ETFs has been surprisingly stable. In fact, these ten ETFs have been the top ten funds since at least 2010 (though the order did switch from time to time). The 2009 top ten list was only slightly different from those in the latter years with IWM, the iShares Russell 2000 in the 9th position and VWO having not made the list yet. The combined total assets of the top ten ETFs at any given time in terms of the overall ETF industry are again amazingly stable: 34.7% for 2012, 35.6% for 2011, 37.0% for 2010, and 38.1% for 2009. It seems that as investors have poured money into the fast-expanding ETF industry, the largest ETFs never lost favor.

*: Source: Bloomberg LP.
**: We here use data as of September 7 of each year.