Sponsored ETFs continue healthy growth; liquidity cited as big reason
Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Asset owners and the coronavirus
    • Alternatives
    • Consultants
    • Coronavirus
    • Defined Contribution
    • ESG
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • SECURE Act
    • Special Reports
    • WorldPensionSummit
    • Ron Schmitz
      Pandemic drives faster transition for Virginia to private markets
      Mubadala Investment Co. logo
      Mubadala draws on portfolio in coronavirus fight
      T.J. Carlson
      Texas Muni reduces downside risk during pandemic, finding opportunities now
      Scott Davis
      ‘Triage plan’ at Indiana system helped stem losses
    • KKR lifts out 3 to focus on clean energy infrastructure
      Richard Johnson
      Appian Capital Advisory adds global investor relations head
      Alternative investment funds faced liquidity squeezes in COVID-19 crisis and 2019
      CI Financial launches global real estate, infrastructure joint venture
    • Callan brings on 2 executives
      Hub International agrees to buy Plan Sponsor Consultants
      Aon names public markets solution leader
      Deloitte to acquire Sydney-based consulting firm Rice Warner
    • Alternative investment funds faced liquidity squeezes in COVID-19 crisis and 2019
      Jerome Powell, chairman of the Federal Reserve, listens during a Senate Banking Committee hearing in Washington on Dec. 1, 2020
      Fed saw some time before taper conditions met – minutes
      International Monetary Fund and World Bank spring meetings signage at the IMF headquarters in Washington
      IMF upgrades global growth forecast, warns of diverging recoveries
      A cashier standing behind a protective barrier assists a customer at a Peter Harris Clothes store in Latham, N.Y.
      Job growth tops 900,000 in March as hiring broadens
    • Pentegra launches pooled employer plan
      Teresa Hassara
      Ascensus taps MassMutual alum as new FuturePlan president
      Economic Group Pension Services scoops up third-party administrator
      OregonSaves gathers $100 million in assets
    • Shoppers wear protective masks while visiting an Apple Inc. store at George Street in Sydney, Australia, on June 24, 2020.
      Apple backs SEC mandate on climate disclosure
      Emissions rise from the Kentucky Utilities Co. Ghent generating station in Ghent, Ky.
      Investors, businesses call for ambitious emissions goals
      Signage for Temasek Holdings Pte. is displayed during a news conference following the company's annual review in Singapore
      Temasek, BlackRock partner to launch carbon-cutting funds
      New York state pension fund limits oil sands investments
    • Fearless Girl
      SSGA’s Fearless Girl statue now shattering glass ceiling
      Tangen video
      Norges chief dons chef’s hat to boost employees’ spirits
      Ken Griffin
      Ken Griffin donates $5 million to give Miami students internet
      New book culls institutional wisdom from podcast series
    • Hedge funds post best first-quarter return since 2000
      Jason Kephart
      Managers see good times ahead in 2021
      Jev Mehmet, CEO of Brevan Howard's Coremont unit
      Brevan Howard runs $50 billion unit like BlackRock’s Aladdin
      A sign outside a Credit Suisse Group bank branch in Murten, Switzerland
      Credit Suisse, Nomura slump as banks tally Archegos damage
    • Mirova adds proxy voting and engagement leader
      S&P Global holds fast on New Jersey’s long-term debt rating
      New York University revamps options for 5 DC plans
    • Mirova adds proxy voting and engagement leader
      Erick Bronner
      Palladium Equity Partners picks new head of fundraising and investor relations
      The Euro sculpture illuminated outside the Eurotower, the former headquarters of the European Central Bank in Frankfurt on Dec. 15, 2020
      European manager AUM rises to record $12.7 trillion in 2020
      Lydia Wu
      Barings chooses head of Greater China distribution
    • Kansas City Employees adopts global strategy with small-cap swing
      Michael C. Viteri
      Arizona appoints new CIO
      A £10 sterling bank note with a pound coin and a ballpoint pen, with focus on the word 'pension.'
      U.K. defined benefit plans’ surplus surges in March
      Columbia University professor Takatoshi Ito
      GPIF treads water as ESG picks up pace
    • Mirova adds proxy voting and engagement leader
      Erick Bronner
      Palladium Equity Partners picks new head of fundraising and investor relations
      Callan brings on 2 executives
      Michael C. Viteri
      Arizona appoints new CIO
    • Bills of euro, dollar and pound currencies, among others
      Ardian closes latest buyout fund at $8.8 billion
      Hand typing on stationary iPhone at an office reception desk
      Private equity’s taste for tech spurs $80 billion deal spree
      Vista Equity promotes 2 to leadership roles on 2 funds
      Azimut takes minority stake in HighPost
    • CalSTRS indutrial property
      Investors hungry for industrial properties
      Tim Wang
      GLP names co-president of logistics, industrial real estate for China
      Frank Forster
      StepStone Real Estate adds managing director for Europe
      Christine Iacoucci
      BentallGreenOak promotes from within to fill Canadian CIO role
    • Andy Schreiner
      New PEPs targeting firms without retirement plans
      Jackie Walorski
      Contribution catch-up for caregivers gaining favor
      Retirement cartoon
      Hopes rising for retirement readiness in 2021
      Neal and Brady
      Retirement security could be only issue both sides accept
    • Corporate pension contributions
      Eddy Awards 2021
      COVID-19: One year in
      Charging Bull, sometimes referred to as the Wall Street Bull or the Bowling Green Bull, a bronze sculpture that stands on Broadway just north of Bowling Green in the Financial District of New York City
      Top-performing managers Q4 2020
    • U.S. still a key market for investors
      Collected coverage of P&I's 2020 WorldPensionSummit
      Pedestrians pass a large advertisement on the Arndale Center shopping mall reading 'Act now to avoid a local lockdown' in Manchester, England
      COVID-19 puts new opportunities and risks on the agenda - WPS panelists
      Screens display stock price information over the trading floor of the NYSE Euronext exchange in Paris
      Private assets will continue to grow in portfolios – WPS panelists
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q2 2020 searches and hires overview report
      Q2 2020 money manager M&A activity summary
      Q2 2020 legal overview report
      Q1 2020 searches and hires overview report
    • Insurer Phoenix chooses Barings for real estate debt allocation
      Texas Employees discloses $246 million in commitments
      New York University revamps options for 5 DC plans
      Riverside County adds BlackRock bond fund, drops Templeton fund
    • Insurer Phoenix chooses Barings for real estate debt allocation
      Texas Employees discloses $246 million in commitments
      New York University revamps options for 5 DC plans
      Riverside County adds BlackRock bond fund, drops Templeton fund
    • Passive Investment Management Services
      Active Extended Global Credit Manager Search
      Actuarial Services
      Investment Management Services
    • Managed account adoption stalls in 2020
      U.S. bonds have worst quarterly return since 1981
      Stable value retains edge over money market funds
      Taiwan Semiconductor’s No. 1 in the emerging markets book
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Letters to the Editor
    • Partner Content
    • Publisher's Update
    • CalPERS cartoon
      Urgency underscores CalPERS' search for a CIO
      Multiemployer plans cartoon
      Money — but no fixes — for multiemployer plans
      Vaccination cartoon
      Rallying to meet the ongoing COVID-19 challenge
      Tesla cartoon
      Don’t confuse wealth creation with retirement saving
    • Bipsync Client Stories: RMS in Action at Pensions and Superannuation Funds
      COVID-19 Makes LP Portfolio Management More Important Than Ever
      China: the outlook is bright for longer-term investors
      Finding Differentiation in Securitized Assets
    • Greg Shea and Steven Kindred
      Commentary: The solution for yield-seeking allocators may be hiding in plain sight
      Jim Park
      Commentary: Asian Americans, Pacific Islanders face ‘bamboo ceiling’ in money management
      Jared Gross
      Commentary: Anchors and allocations – breaking the grip of 60/40
      Peter Marber
      Commentary: Is it time for an emerging markets rally?
    • Writer using a typewriter
      OCIO industry needs to adopt GIPS
      Writer or journalist workplace. stock illustration
      Even as it assails China, Trump administration emulates it
      Skeptical of Main Street support for proxy adviser proposal
      Focus on manager diversity pushes asset owners’ to walk the talk
    • P&I Content Solutions
      Research for Institutional Money Management
      P&I Content Solutions
      Top questions for institutional investors
      Sponsored Content By Newton Investment Management
      Growth and Innovation in Emerging Markets
      P&I Content Solutions
      Fixed income 2021
    • Help us help you by supporting quality journalism
      You Must Believe in Spring
      Everything Must Change
      Tomatoes & Investments
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • watch video
      1:23
      The passive fixed-income glut
      watch video
      1:38
      Is it time for DC plans to embrace private equity?
      watch video
      5:39
      The coronavirus pandemic: One year later
      watch video
      0:45
      Private funds weathered 2020 turmoil
    • Understanding the PEP Evolution
      Divest or engage?
      New Outlook on Income: A Framework for Evaluating DC Retirement Income Solutions
      Innovations in DC: Helping supercharge retirement outcomes
    • POLL: The Biden infrastructure plan
      POLL: Retirement income solutions
      POLL: Working after the pandemic
      POLL: The year ahead for the 1,000 largest U.S. retirement funds
    • view gallery
      9 photos
      Coronavirus and the markets
      view gallery
      22 photos
      The 1,000 largest retirement funds: 2020
      view gallery
      10 photos
      Outlook 2020
      view gallery
      10 photos
      2019 as seen through the eyes of Roger
    • Managed account adoption stalls in 2020
      U.S. bonds have worst quarterly return since 1981
  • Events
    • Conferences
    • Webinars
    • DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
    • Understanding the PEP Evolution
      Divest or engage?
      New Outlook on Income: A Framework for Evaluating DC Retirement Income Solutions
      Innovations in DC: Helping supercharge retirement outcomes
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. MONEY MANAGEMENT
May 26, 2014 01:00 AM

Sponsored ETFs continue healthy growth; liquidity cited as big reason

Rob Kozlowski
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Updated with correction.

    Total worldwide assets managed in sponsored exchange-traded funds soared 23.5% to $1.92 trillion as of Dec. 31, according to the latest Pensions & Investments money manager survey.

    It is the second straight year that sponsored ETF assets have jumped more than 20%; they jumped 27.4% to $1.55 trillion in 2012, according to P&I data.

    Jon Pliner, New York-based senior investment consultant at Towers Watson & Co., said in a telephone interview that the attraction of exchange-traded funds for institutions, in particular, also is growing, particularly as a shorter-term investment.

    “From an institutional perspective, they're appealing in their liquidity ... if a sponsor is seeking a shorter-term exposure, whether it (is) through some sort of a transition process or just looking to get the shorter term exposure,” Mr. Plainer said. “They're good vehicles for that,” Mr. Plainer added. “There (are) large levels of liquidity, there's the ease of transactions, etc. What we don't see so much from our client base is a large use of them as longer term exposure for many of our institutional clients. The need for daily liquidity or intraday liquidity is not really there.”

    BlackRock Inc. and State Street Global Advisors are by far the two largest ETF managers in P&I's survey with $914 billion and $399 billion, respectively, together comprising 68.5% of the total assets.

    While those two managers saw their assets increase 21.5% and 17.2%, respectively, smaller players are seeing their assets rise even more dramatically.

    The third and fourth overall leaders in sponsored ETF assets, Vanguard Group Inc. and Invesco, saw their assets jump 35.9% and 47.7% respectively, to $333.87 billion and $94.38 billion.

    James Rowley, Malvern, Pa.-based senior investment strategist at Vanguard, said one reason for the boom in ETFs is the overall focus on index funds. “There's a very big focus on low-cost indexing in the past decade,” Mr. Rowley said. “There's an overwhelming amount of assets going into the lowest quartile of costs.”

    Other reasons, Mr. Rowley noted, are the transition in the adviser industry to a more fee-based compensation model, as well as the low-cost architecture involved. “Some of our most popular funds are what you might associate with diversified low-cost beta,” said Mr. Rowley.

    He cited the Vanguard Total Stock Market ETF, Vanguard FTSE Emerging Markets ETF and the Vanguard Total Bond Market ETF as popular funds.

    Bobby Brooks, Boston-based national sales manager for Invesco PowerShares, said the firm's emphasis on smart beta since the founding of its ETF business in 2002, has contributed significantly to the growth in assets.

    “Last year in the industry, the smart beta category (overall was) actually growing faster in terms of percentage than the traditional cap-weighted beta,” Mr. Brooks said.

    Among the funds that saw significant asset growth in the past year was the PowerShares Buyback Achievers Portfolio, according to Mr. Brooks.

    “It's built on the concept of firms and companies buying back their shares,” Mr. Brooks said. “As firms become cash-rich, they either pay out dividends or buy back their shares. In the past we've seen our clients peel some of their business away from the dividend payouts.”

    “It fits in that smart beta category,” he added.

    Other funds that saw asset growth in the past year were the PowerShares S&P 500 Low Volatility Portfolio and the PowerShares Senior Loan Portfolio, “the first bank loan ETF of its kind,” Mr. Brooks said.

    Biggest increase

    Among the 500 largest managers based on worldwide institutional assets under management with at least $250 million in the sponsored ETFs, Northern Trust Asset Management, Chicago, had the biggest increase for the second year in a row, up 180.8% to $6.7 billion at year-end 2013. A year earlier, Northern Trust reported a 271% jump to $2.4 billion.

    Shundrawn Thomas, executive vice president and head of the exchange-traded funds group at Northern Trust Asset Management, said the FlexShares group of 14 index ETF funds and one active fund, has benefited from what he calls a more long-term investor-oriented approach rather than a product-oriented one.

    “Most people in the asset management business have a product-oriented strategy where they say "Where is growth happening? What is the hot area?'”

    “Investors kind of have four basic categories, objectives or needs: They're trying to grow their assets; they want to manage certain types of risks; they need to have liquidity provided by that portfolio; and they want to generate income,” Mr. Thomas said.

    “How we approach product development is: What is the actual investor trying to do and how to we develop products to meet that need?”

    Mr. Thomas also noted that their FlexShares' concentrated number of ETF funds is beneficial in a market where “it's not uncommon to see people in past years to see people to come out with 40, 50 or 60 funds.”

    Mr. Thomas said one success story is one of the earliest funds offered by Northern Trust, which began its ETF business in September 2011 — its Global Upstream Natural Resources Fund.

    “We devised it to have a truly diversified approach in the index,” Mr. Thomas said.

    “What we have is what we call our sleeve — energy agriculture, metals both precious and industrial — but we also invest in water and timber.”

    “We also felt strongly we wanted global exposure so it's a global fund,” Mr. Thomas said. “The uniqueness of the design of this strategy is very appealing for investors.”

    Charles Schwab Investment Management had the next highest increase, up 97.5% to $16.9 billion as of Dec. 31.

    John Sturiale, San Francisco-based senior vice president of product management at Charles Schwab Investment Management, said the firm's ETF offerings are concentrated in the core assets of an investment portfolio.

    “For example, we're not in sector ETFs. We're not leveraged we're not country specific, we've been in the heart of the portfolio,” Mr. Sturiale said.

    “Large blend, small blend, international core, etc. That's where we've concentrated our efforts. Sixteen of the ETFs are cap weighted, and the other (six) are fundamental or alternative weighted.”

    Other managers that sponsor ETFs and that saw significant asset increases were: Guggenheim Investments, up 77.9% to $21.7 billion; Pacific Investment Management Co., up 63% to $16.9 billion; and Nomura Asset Management, up 46.8% to $36.2 billion.

    Related Articles
    ETF returns more than just indexes, expense ratios
    Largest money managers by the numbers
    Money managers put financial crisis behind them
    Managers not straying far from traditional fixed income
    Infrastructure, buyouts see big jumps
    Asset owners could account for 25% of global ETF usage within 5 years — iShares…
    Benefit and future of non-transparent ETFs uncertain
    Recommended for You
    Mirova adds proxy voting and engagement leader
    Palladium Equity Partners picks new head of fundraising and investor relations
    Palladium Equity Partners picks new head of fundraising and investor relations
    European manager AUM rises to record $12.7 trillion in 2020
    European manager AUM rises to record $12.7 trillion in 2020
    In Challenging Markets, Systematic Global Macro Strategies Could Hold Opportunity
    Sponsored Content: In Challenging Markets, Systematic Global Macro Strategies Could Hold Opportunity
    sponsored
    Events
     
     
    Sponsored
    White Papers
    Bipsync Client Stories: RMS in Action at Pensions and Superannuation Funds
    COVID-19 Makes LP Portfolio Management More Important Than Ever
    China: the outlook is bright for longer-term investors
    Finding Differentiation in Securitized Assets
    Green and sustainable bonds in emerging markets
    Portfolio Protection: One Size Fits None
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    April 5, 2021 Page One

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Asset owners and the coronavirus
      • Alternatives
      • Consultants
      • Coronavirus
      • Defined Contribution
      • ESG
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • SECURE Act
      • Special Reports
      • WorldPensionSummit
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Letters to the Editor
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center