SmartInMoney

 

 

 

Trio Exchange Traded Fund (ETF) providers iShare, State Street Global Adviser (SSgA) and Vanguard, dominate the worldwide and domestic ETF industries. Among 95 ETF providers, these three companies control more than 71% of the worldwide asset under management and 85% of the U.S. assets at the end of August 2009, according to Barclays Global Investors (BGI).

 

As a the largest ETF provider in terms of both number of products and asset, iShare alone controls 48.2% global market and 52.9% U.S. market with $429.32 billion asset under management from 391 ETFs. SSgA is second with 15.6% market share followed by Vanguard with 15.6% market share.

 

iShares is a unit of Barclays Global Investors (BGI) is one of the world's largest asset managers. BGI is a cluster of Barclays Group, a major global financial services provider operating in over 50 countries. Barclays Group has received a binding offer from BlackRock, Inc. to acquire BGI for US$13.5bn. Assuming regulatory and shareholder approvals it expects the transaction to complete by the end of 2009. The enlarged firm will be known as BlackRock Global Investors.

 

 

 

SPDR (SPY) leads the ETF markets with $73.3 billion asset under management as of the end of August 2009. SPDR from the State Street Global Adviser tracks S&P 500 index, an index of 500 largest businesses in the U.S.

 

At the second place is iShares MSCI EAFE Index (EFA) that track MSCI EAFE index, an equity benchmark for its international stock performance, with $33.5 billion net assets. Tracking performance of the MSCI Emerging Markets index, iShares MSCI Emerging Markets Index (EEM) trails closely at the third with 30.7 billion net assets. These three U.S. ETFs top the ranks in both U.S. and global markets. 

 

This rank is not surprising as investors commonly use these three ETFs as vehicles to diversify their equity investment. Adding equity exposure of both developed nations outside of North America and emerging countries to equity of largest U.S. companies provides investor with a broad diversification covering global equities. This ability to offer exposure to such a wide variety markets and sectors with relative ease and cheap is EFTs’ main strength that is not offered by other investment vehicles. As a result, ETFs continue to enjoy considerable momentum.

 

 

 

 

 

Among ETF categories, large-cap equity ETF is the most popular in the U.S. with 21.7% of the total assets followed by international equity at the second with 13.6% and emerging markets equity at the third.

 

 

BGI also reported that the average total expense ratio for equity ETFs in the U.S. is 32 basis points versus 78 basis points per annum for the average equity index tracking fund and 141 basis points for the average active equity fund, according to the BGI report.