Ron Rowland: Twenty-two new listings in June pushed the ETP count above the 1,600 threshold to close the month at 1,613 (1,408 ETFs and 205 ETNs). A total of 101 new products came to market in the first half of the year, while just 24 closed up shop. Although this is an improvement over the past two years, if this pace continues in the second half of the year, 2014 will end up being only the fifth best year for product introductions. Projecting the current trend into the future suggests listings might cross the 2,000 milestone sometime in 2017.
Assets continue to climb too, surpassing $1.8 trillion in June. Asset growth has been more robust than product growth, and assets could reach $2 trillion before the end of the year. You can bet the ETF industry will be celebrating that event.
New introductions in June consisted of eighteen ETFs and four ETNs. Most of the ETF launches were in the “smart beta” category including ten “quality mix” funds from State Street SPDRs and three BlackRock iShares pursuing “low volatility” strategies. BlackRock also beefed up its “Core” product line with four new products and the repositioning of five existing ETFs. Three of the ETN launches provide leveraged exposure to their underlying indexes.
Just 42 funds have more than $10 billion in assets, with their ranks increasing by one in June. These 42 represent just 2.6% of the product count while holding the majority (55.6%) of industry assets. The number of products exceeding $1 billion increased by three to 241 and account for 89.0% of all ETP assets.
Asset distribution is heavily skewed with the “average” ETF having $1.16 billion in assets while the “median” fund has just $86 million. Another indication of just how lopsided the industry is, the 809 smallest funds only account for 1% of assets. More than half of the products are fighting for the last 1% of assets.
Trading activity dropped 5.5% in June to $1.09 trillion, after plunging 21.3% in May. Either the summer slowdown arrived early this year, or August is going to be among the lowest volume months in years. For the second month in a row, the quantity of ETFs averaging more than $1 billion a day in trading activity was only four. However, these four were responsible for more than 46% of all ETP dollars traded.
|June 2014 Month End||ETFs||ETNs||Total|
|Currently Listed U.S.||1,408||205||1,613|
|Listed as of 12/31/2013||1,332||204||1,536|
|New Introductions for Month||18||4||22|
|Delistings/Closures for Month||0||0||0|
|Net Change for Month||+18||+4||+22|
|New Introductions 6 Months||95||6||101|
|New Introductions YTD||95||6||101|
|Net Change YTD||+76||+1||+77|
|Actively-Managed Listings||89||n/a||89 (+0)|
|Assets Under Mgmt ($ billion)||$1,840||$27.8||$1,868|
|% Change in Assets for Month||+3.7%||+3.6%||+3.7%|
|Qty AUM > $10 Billion||42||0||42|
|Qty AUM > $1 Billion||235||6||241|
|Qty AUM > $100 Million||722||37||759|
|% with AUM > $100 Million||51.3%||18.1%||47.1%|
|Monthly $ Volume ($ billion)||$1,064||$30.3||$1,094|
|% Change in Monthly $ Volume||-3.6%||-43.3%||-5.5%|
|Avg Daily $ Volume > $1 Billion||4||0||4|
|Avg Daily $ Volume > $100 Million||71||2||73|
|Avg Daily $ Volume > $10 Million||257||11||268|
Data sources: Daily prices and volume of individual ETPs from Norgate Premium Data. Fund counts and all other information compiled by Invest With An Edge.
New products launched in June (sorted by launch date):
- iShares MSCI Asia ex Japan Minimum Volatility ETF (AXJV), launched 6/5/14, will provide exposure to stocks in Asia, except Japan, while attempting to reduce volatility when compared to the broader Asian equity market. It will invest in both developed and emerging market countries, with considerable exposure to China and South Korea. Investors should expect a high concentration in financials, technology, and telecom. The fund has an expense ratio of 0.35% (AXJV overview).
- iShares MSCI Europe Minimum Volatility ETF (EUMV), launched 6/5/14, will provide exposure to European equities, while attempting to reduce volatility when compared to the broader European market. Financials, consumer staples, and health care represent the largest sector allocations. Investors will pay 0.25% annually to own this ETF (EUMV overview).
- iShares MSCI Japan Minimum Volatility ETF (JPMV), launched 6/5/14, will provide exposure to Japanese stocks, while attempting to reduce volatility when compared to the broader Japanese market. The industrials and consumer discretionary sectors each account for about 20% of the holdings. The ETF sports an expense ratio of 0.30% (JPMV overview).
- SPDR EURO STOXX Small Cap ETF (SMEZ), launched 6/5/14, is designed to provide a representation of small-cap companies across the countries that have adopted the Euro as their currency. The ETF currently holds 98 stocks, with financials at 33% and consumer discretionary at 20% constituting the majority of the holdings. The fund sports a 0.45% expense ratio (SMEZ overview).
- SPDR MSCI EAFE Quality Mix ETF (QEFA), launched 6/5/14, will invest in large- and mid-cap companies across 22 developed markets in Europe, Australasia, and the Far East. Countries with more than a 10% allocation include the U.K. at 26%, Japan 18%, and Switzerland 13%. Stocks will fit in one of the following three categories: value, low volatility, or quality factor selection. There is no shortage of holdings with about 900 positions. The ETF has an expense ratio of 0.30% (QEFA overview).
- SPDR MSCI Emerging Markets Quality Mix ETF (QEMM), launched 6/5/14, will invest in large- and mid-cap equities across 21 emerging markets. Countries with a more than 10% allocation include China at 21%, South Korea 15%, and Taiwan 13%. Stocks will fit in one of the following three categories: value, low volatility, or quality factor selection. The ETF has a good number of holdings, totaling near 600, and it has an expense ratio of 0.30% (QEMM overview).