Exchange-traded fund assets rose in September, though growth was considerably less impressive than in the previous month. Still, most observers agree that assets are on track to reach and exceed 2005 ETF flows. According to data from State Street Global Advisors, during September, U.S.-listed ETF assets rose by $4 billion to $363 billion. This compares to the roughly $10 billion in assets accumulated in August. Through the end of September, ETFs have accumulated about $60 billion in assets so far in 2006, which means they are likely to meet -- and even beat -- last year's inflows of approximately $70 billion. The biggest winners for the month were funds that represent two styles of investing -- value and growth. This group garnered over $2 billion in assets, with a good chunk coming from Barclays Global Investors' iShares Russell 1000 Growth ( IWF) and iShares Russell 1000 Value ( IWD). Together, these products accumulated almost $1 billion in new investments. ETFs that track specific sectors of the market also performed well, collecting about $1.7 billion in assets. More than half of that growth was spurred by State Street's Select Sector SPDR-Financial ( XLF) and the Select Sector SPDR-Technology ( XLK). There were only two sectors that had negative flows for the month -- energy and materials. However, year to date, no individual ETF sector has logged negative flows.
Another group that generated substantial inflows in September was specialty ETFs, which took in $1.2 billion in assets. State Street defines these ETFs as tracking dividend-related, social, clean energy, leveraged and fundamentally weighted indices. Some of this specialty growth can be attributed to the spate of new products that hit the market in September, especially the
10 ETFs launched by PowerShares Capital Management based on fundamentally weighted indices. Other groups generated modest flows during the month. In terms of market cap-weighted ETFs, investors put some money into broad and large-cap ETFs, but both groups experienced only mild increases. Mid-, small- and micro-cap ETF assets decreased during the month. International ETFs also registered minor growth -- about $200 million -- led by the iShares MSCI EAFE ( EFA), which contributed over $600 million. Meanwhile, ETFs that track commodities and fixed income saw modest decreases. A total of 21 new ETFs hit the market in September. PowerShares launched 11 funds during the month, including the 10 fundamentally weighted ETFs and a Deutsche Bank and PowerShares ETF that invests in currencies of the G-10 countries. Barclays unveiled five ETFs designed to provide global exposure to different sectors of the market, and Claymore Securities, a company new to ETFs but known for its role in the closed-end fund and unit investment trust industries, premiered five fairly quirky ETFs designed to track everything from neglected stocks to insider trading.
While the entrance of
new products and players may start to level the playing field a bit, in terms of assets, Barclays Global Investors is still captain of the ETF ship. According to data from Citigroup, as of Sept. 1, BGI managed more than 57% of all ETF assets, or roughly $215 billion. It's also ahead in terms of the number of products on the market, currently running 122 funds, including the five that launched in September. State Street is in second place, with about a quarter of the total ETF market share, or $90 billion in assets. It started September with 41 ETFs, but one of its products, the SPDR O-Strip (which traded under the ticker OOO), closed on Sept. 13. When it was shuttered, the O-Strip had less than $5 million in assets and was experiencing very low trading volumes. The third-place spot belongs to Nasdaq, which has almost 4.9% of the market share. That is followed by the Vanguard Group, with about 4.75%, Merrill Lynch at 2.8%, Bank of New York with 2.35% and PowerShares with 1.63%. The rest of the pie -- which amounts to just 1% of total market share -- is divided between Rydex Investments, ProShares, Deutsche Bank, Victoria Bay Asset Management, WisdomTree, Van Eck Global, First Trust and Fidelity, according to Citigroup. Quick note: Citigroup's ETF data includes products such as Merrill Lynch's HOLDR as well as others that track things such as commodities and currencies. These products are structured a bit differently than ETFs, and though they generally operate in the same way, data from other companies may exclude them.