Although it’s generally not released until the middle of the following month, State Street’s monthly ETF snapshot always makes for interesting reading. As I thumbed through the May issue this afternoon, I had a number of “yeah, but…” moments – although completely accurate, some of the stats don’t tell the whole story. But before we get into that, a few of the highlights:
- As of May 31, 24 ETF managers maintained 728 ETFs with total assets under management of $587 billion
- ETF assets rose $56 billion in May, or 10.6% from the previous month
- Five new ETFs were launched in May, while 19 ETFs were closed, resulting in a net decrease in the number of funds of 14
- All 12 of SSgA’s ETF categories recorded increases in assets during the month, with Specialty ETFs (23.3%) and International ETFs (21.9%) the biggest gainers
- The largest three ETF managers made up nearly 85% of the U.S.-listed ETF market
| Manager | Assets ($MM) | Market Share |
|---|---|---|
| iShares | $290,707 | 49.5% |
| State Street | $143,653 | 24.5% |
| Vanguard | $59,503 | 10.1% |
| ProShares | $26,055 | 4.4% |
| BNY | $20,255 | 3.5% |
- EEM leapfrogged EFA to claim the third spot on the list of largest ETFs by asset size, with State Street funds holding on to the top two places:
| Manager | Ticker | Assets ($MM) |
|---|---|---|
| State Street | SPY | $64,164 |
| State Street | GLD | $35,219 |
| iShares | EEM | $31,068 |
| iShares | EFA | $30,377 |
| iShares | IVV | $17,745 |
Digging A Little Deeper
While these statistics are useful in evaluating the state of the ETF industry, a few of them require some additional explanation:
- Total ETF Assets: The reported increase in total ETF assets for the month is $56 billion, the largest monthly increase in assets to date in 2009. While strong inflows from other investment types and creation of additional ETF units accounted for part of the rise, broad equity market rallies also contributed. The total U.S. market rose more than 5% during May, led by large cap equities. Year-to-date, ETF assets were up 10%, compared to 4% for the U.S. stock market.
- Number of ETFs: At first blush, the industry’s net decrease of 14 funds paints a dismal picture. In reality, however, all 19 fund closures were attributable to PowerShares funds that had failed to garner sufficient interest to support a liquid market. Despite losing more than 15% of its funds, PowerShares total assets actually increased from $9.5 billion in April to $10.4 billion in May. And the Dividend / Fundamental ETF category, which absorbed 13 of the closures, also saw an increase in assets, from $9.1 billion to $9.8 billion. So while 19 fund closures seems high, (1) they were all concentrated at one issuer and (2) when measured by total assets, the impact on the industry was negligible.
- International Gains: While the International ETF category posted strong gains for the month, this was again partially attributable to strong equity market performance. During May, the MSCI EAFE rose 12.0%, compared to 5.6% for the S&P 500.
All things considered, May proved to be another stellar month for the ETF industry, with money continuing to flow in and new funds continuing to reach market. And the data for June will no doubt be very interesting again, with numerous new funds already launched or announced, not to mention the iShares acquisition.
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