Market Overview

Inside The Battle For ETF Supremacy

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Inside The Battle For ETF Supremacy
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Flows to exchange traded funds in 2018 are unlikely to approach the record $450 billion seen last year. This year's ETF inflows totals will likely be on par with or slightly exceed the $200 billion seen from 2014 through 2016.

Two issuers – BlackRock Inc.'s (NYSE: BLK) iShares unit and Vanguard – remain perched atop the flows leaderboard.

What To Know

“iShares and Vanguard remain the top-two industry heavyweights and had gathered 73% of net inflows in the first ten months of 2018 according to data on ETF.com, above their 64% market share,” said CFRA Research Director of ETF & Mutual Fund Research Todd Rosenbluth in a note out Monday.

Year-to-date, as of Nov. 9, six of the top 10 ETFs in terms of new assets added are iShares funds while the other four are Vanguard funds. Among the 10 worst ETFs for assets lost this year, six are iShares funds, but no Vanguard products are found on that list.

Why It's Important

Along with State Street Corp.'s (NYSE: STT) SPDR brand, iShares and Vanguard make up the “big three” of the ETF universe, but other players are gaining momentum. Issuers on the rise include Charles Schwab Corp. (NYSE: SCHW) and JPMorgan Chase & Co.'s (NYSE: JPM) JPMorgan Asset Management (JPAM) unit.

“At Schwab, the $24 billion of net inflows thus far have positioned the industry’s number five provider to match or exceed its $28 billion of new money a year ago,” said Rosenbluth. “Yet the share of net inflows is more than double that of its total asset base. Like at iShares and Vanguard, bond ETFs have been a major driver.”

Fixed income products, such as the Schwab US TIPS ETF (NYSE: SCHP) and the Schwab Intermediate-Term US Treasury ETF (NYSE: SCHR), are among the drivers of Schwab's 2018 ETF asset growth.

JPAM is now the eleventh-largest U.S. ETF sponsor and $11 billion of its $16 billion in ETF assets under management have flowed in this year, according to Rosenbluth.

What's Next

Investors looking to participate in ETF industry growth on a more granular level can consider the ETF Industry Exposure and Financial Services ETF (NYSE: TETF). TETF, which tracks the Toroso ETF Industry Index, is home to ETF issuers, market markets, index providers and other public companies with roles in the ETF business. TETF holds shares of BlackRock and Schwab, among other ETF-related firms.

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