Market Overview

Exponential ETF Growth To Continue, Says BlackRock

Exponential ETF Growth To Continue, Says BlackRock

Globally, exchange traded funds have about $5 trillion in combined assets under management, but the ETF industry is expected to continue growing at a rapid rate over the next several years.

BlackRock, Inc. (NYSE: BLK), the parent company of iShares, the world's largest ETF issuer, views ETFs as a disruptive technology in the investment landscape and one that will be increasingly embraced by investors.

“Another transformative technology is catalyzing change,” BlackRock Managing Director Martin Small said in an open letter to investors. “More and more people are choosing ETFs to actively pursue the goals that matter most to them by tapping into markets and strategies that were once available to only the most deep-pocketed professionals. Along the way, they are reshaping what’s possible by demanding fresh ideas to reflect fresh realities.”

Compelling Data

Data indicate that one in three investors currently own ETFs, up from 25 percent last year, according to BlackRock. That is impressive growth in just one year and that upside trajectory is forecast to continue.

“Today, one in three U.S. investors owns an ETF, according to BlackRock’s latest ETF Pulse Survey,” said Small. “That’s up from one in four last year, but we are just getting started. By 2020, we expect half of such investors to be following your lead and making ETFs an integral part of how they build portfolios.”

The Pulse Survey indicates 44 percent of investors use ETFs for increased diversification, while 37 percent turn to ETFs for sector exposure. Another 33 percent of polled investors use ETFs to generate income.

Fees Matter

Fees, particularly paltry ones, matter for ETF investors. That has been a consistent theme over the ETF industry's evolution and one that remains true today.

Year-to-date, the iShares Core U.S. Aggregate Bond ETF (NYSE: AGG), iShares Core S&P 500 ETF (NYSE: IVV), iShares Core MSCI Emerging Markets ETF (NYSE: IEMG) and the iShares Core MSCI EAFE ETF (CBOE: IEFA) have accounted for 44 percent of all inflows to U.S.-listed ETFs, according to Bloomberg.

The average annual fee on those four ETFs is 0.77 percent per year, or just $7.70 on a $10,000 investment.

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