ETFs Then And Now

by on December 19, 2012 | ETFs Mentioned:

As the calendars get ready to flip to 2013, another chapter in the relatively short history of ETFs will be written. Next year will mark the official 20th birthday for ETFs, as SPY will enter its third decade as a publicly traded security.

It’s remarkable to see just how much the ETF industry has changed over the past five years; it wasn’t that long ago that the very survival of ETFs was seriously debated and many investors were skeptical that these securities would ever catch on. Below, we highlight some of the differences between the end of 2007 and now:

Assets & Size

There are now more than 1,400 ETFs, more than double the number that were trading at the end of 2007. Back in 2007 there were fewer than 300 ETFs with at least $100 million in assets; now, there are more than 500 that have crossed that threshold.

Newcomers: Issuers

Many of the issuers who are now major players in the ETF industry had yet to launch their first product at the end of 2007. Direxion, Schwab, and PIMCO, among many others, were on the outside looking in. Issuers who weren’t around in 2007 now have more than $20 billion in aggregate assets.

Among those who have sprung up since 2007 are:

Newcomers: ETFs

While the largest ETFs are generally those that have been around since the early days of the ETF industry, several relative newcomers have gained significant traction with investors. The biggest ETFs that weren’t around five years ago include:

Ticker ETF AUM ($B) Launch
VOO Vanguard S&P 500 ETF $6.2 September 2010
AMJ Alerian MLP Index ETN $4.8 April 2009
VCSH Short Term Corporate Bond ETF $4.7 November 2009
AMLP Alerian MLP ETF $4.4 August 2010
BOND Total Return ETF $3.9 March 2012
VCIT Intermediate Term Corporate Bond ETF $3.3 November 2009
SPLV S&P 500 Low Volatilty Portfolio $3.1 May 2011

Come And Gone

Of course, the last five years haven’t been kind to everyone who’s been involved in the ETF industry. A number of issuers have come and gone, flaming out as their products failed to find an audience and the reality of a business built on low expense ratios proved too challenging.

Among the issuers that made a run at ETFs but ultimately pulled out are:

  • Javelin
  • Russell
  • FaithShares
  • FocusShares
  • MacroShares

Commission Free Trading

Back in 2007 the idea of commission free trading of ETFs was non-existent–investors were still forking over brokerage fees left and right. Thanks to a trend started by Schwab, there are now more than 200 ETFs eligible for commission free trading on one of the various platforms that has utilized this strategy to lure ETF-friendly investors. Those programs that feature commission free ETFs include:

5 Largest ETFs

At the end of 2007, the S&P 500 SPDR (SPY) was knocking on the door of $100 billion in assets. SPY remains the largest ETF today (it’s topped the $100 billion mark), but there’s been some shuffling among the other funds at the top of the ETF leaderboard:

2007 2012
Ticker ETF AUM Ticker ETF AUM
SPY S&P 500 SPDR $99,438 SPY S&P 500 SPDR $114,208
EFA iShares MSCI EAFE $51,895 GLD Gold SPDR $74,559
EEM iShares MSCI Emerging Markets $28,854 VWO Vanguard Emerging Markets $58,692
QQQ PowerShares QQQ $21,764 EEM iShares MSCI Emerging Markets $44,190
GLD Gold SPDR $16,881 EFA iShares MSCI EAFE $38,286

Disclosure: No positions at time of writing.