Posted on 01/27/2012
Many of you are aware that the first ever ETF to come to market was the SPDR S&P 500 ETF Trust (SPY), as it was launched back in 1993. Still to this day, it remains the largest ETF and also the first ETF to gather more than $100 billion in assets under management (AUM). What you may not be aware of, however, is the fact that over the last 18 years the number of ETFs available for investment has increased by 211,933%, and the assets housed within these products has grown by more than 136,800%. With money continuing to flow into exchange traded products at exponential rates, we wanted to look back over the full history of this industry to further visualize this exponential growth.
The ETF Industry Association recently released their composite ETF data through the month of December. This is a resource we consult at the end of each month, as it provides the best issuer-neutral data in one place (that we have come across) which is exclusive to exchange traded products. We compile this data each month to update the image you see below. The two pieces of information we are mainly interested in are the number of ETFs available for investment and the total assets housed within these products. We then compare this data on an annual basis to better visualize the rate of growth within this area of the financial industry.
During the month of December, we saw total assets under management (AUM) decrease from $1.063 trillion to $1.060 trillion, which is a decrease of about 0.319%. Another observation that can be made from this data collection is that the number of ETFs/ETNs also went down from 1376 to 1369. You may be wondering what happened in December that caused this decline. There were a number of ETFs from multiple providers that were terminated last month such as HOLDRS, which liquidated 11 of their products, and Jefferies, which closed two commodity-focused products (CRBA and CRBI). The termination of those products, however, did not have a significant impact on overall assets as their AUMs are relatively low. In fact, we saw a net cash inflow of $16.195 billion for December, and $117.55 billion for 2011. If we look further at the whole year of 2011, the ETF industry saw a growth of almost 25% in terms of the number of exchange-traded products out on the market while the AUM went up by 4.76%, an increase of about 1% from the previous year.