The exchange-traded funds industry is growing by leaps and bounds with that growth forecast to continue in significant fashion over the next several years.
Investors looking to take advantage of that trend have some options to consider, including individual stocks of ETF sponsors. Not surprisingly, there's an ETF that can help investors tap the industry's impressive growth potential.
The ETF Industry Exposure & Financial Services ETF TETF is about 11 months old and is more than a traditional play on financial services and asset management stocks. TETF “offers exposure to a myriad of supporting players in the ETF ecosystem (ETF sponsors, index providers, exchanges, traders, and more),” according to Toroso Asset Management.
Index Data
TETF tracks the Toroso ETF Industry Index, a benchmark marked dedicated to companies that derive revenue from the nearly $5 trillion global ETF industry. Whereas traditional, diversified financial services ETFs are heavy on money center and investment banks, insurance providers and capital markets firms, TETF focuses exclusively on companies with ETF industry exposure.
The ETF holds 44 stocks, including a mix of index providers, ETF sponsors, publicly traded market makers and liquidity providers, exchange operators, custodian banks and brokerage firms. TETF's top two holdings –- MSCI Inc. MSCI and S&P Global Inc. SPGI -– are index providers, not ETF issuers. The fund's largest position in an ETF provider is an almost 6.2 percent weight to BlackRock Inc. BLK, owner of iShares, the world's largest ETF issuer.
Over a quarter of TETF's holdings actually issue ETFs.
An Effective Strategy
Data support the notion that investing in the growth of ETFs is a winning strategy. Year-to-date, TETF's underlying index has outpaced the S&P 500 Financial Services Index by a margin of better than 2-to-1, according to issuer data.
Over the past month, three months and six months, TETF's benchmark has easily topped the S&P 500 Financial Services Index. Since inception, TETF's index has trounced the S&P 500 Financials by approximately 1,600 basis points, according to Toroso data.
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