The ETF Industry Has Plenty More Room to Grow

Nevertheless, while the ETF industry has enjoyed a boom as more investors adopt the nifty tool, there is still a lot of room to grow.

“There are actually more advisors who could stand to use ETFs – 25% of all advisors don’t use ETFs today,” Rich Powers, Head of ETF Product Management, Vanguard, said at the Inside ETFs conference.

“Even if you think about the 75% who do, only 14% to 15% of their portfolios are in ETFs, so there’s upside there. Maybe, even more exciting is the individual investor – only 10% of their assets are held in ETFs,” he added.

Many have come to rely on ETFs for their ease of use through a basic brokerage platform and low fees. Vanguard has benefited from this shift in investor demand toward low-cost index-based funds as the ETF provider offers some of the cheapest broad beta strategies around.

For example, the Vanguard Total Stock Market ETF (VTI A+), which tries to reflect the performance of the CRSP US Total Market Index, an index comprised of U.S. large-, mid-, and small-cap equity diversified across growth and value styles, comes with a dirty cheap expense ratio of 0.03%.

Investors have also been investing with costs in mind, shifting toward cheaper ETFs like those offered by Vanguard. Consequently, Vanguard is now the second-largest ETF provider with $963 billion in assets under management.

This article originally appeared on ETFTrends.com.