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ETF Industry to Hit Record by 2020: Stocks & ETF to Gain

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Since the launch of the first ETF 25 years ago, the exchange traded fund industry has attained great heights, expanding its base and scale with product initiations and gone through a sweeping change when it comes to themes.

All these have taken the U.S. listed ETF tally to 2,183 from around 127 fund sponsors, as per xtf.com. Total assets under management is around $3.57 trillion. The number of ETFs have gained about 3% so far this year while assets have swelled by 4.3% (read: Bet on ETF Industry's Growth with This Fund).

Not only this, a significant number of ETFs are in the pipeline, pointing to growing investor interest for exchange-traded products in this market. A wide range of innovative and fresh-themed products in the space, which aim to serve at the best interest of investors amid market ups and downs, should take the credit for this growth.

Industry to Hit a Record in 2020?

According to a survey conducted by BlackRock, within two years, half of all U.S. investors will put money in at least one ETF, as quoted on Market Watch. This will mark a considerable improvement from the current level’s one in three U.S. investors holding a minimum of one ETF and last year’s record of one-fourth of investors showing interest in ETFs. Also, the percentage of investors who now hold one fund is likely to double their holding over a three-year period.

In October 2017, Goldman Sachs noted that U.S. flows into ETFs would hit $400 billion over 2018, marking a 33% surge from its 2017 estimate of $300 billion. According to data from State Street Global Advisors, inflows for exchange-traded funds attained the record mark of $464 billion in 2017, up from the prior inflows record of $288 billion in 2016. In contrast, mutual funds gathered $91 billion in inflows over that same period, according to Credit Suisse data provided through November 2017 (read: Inside February ETF Asset Report).

Within Market Share

According to Morningstar Direct, BlackRock Inc. (BLK - Free Report) has about 39.3% of the market share with Vanguard taking the second spot with slightly less than 25% of the market. In the year-to-date frame, iShares ETFs have seen inflows of more than $26billion, the highest among all ETF issuers (read: Solid ETF Asset Inflows Boost BlackRock Earnings).

Stock & ETF Beneficiaries

Stocks to Gain

S&P Global Inc. (SPGI - Free Report)

This is a provider of ratings, benchmarks, analytics and data to the capital and commodity markets. The stock has a Zacks Rank #2 (Buy) and belongs to a top-ranked Zacks industry (top 19%).

MSCI Inc (MSCI - Free Report)

This is an independent provider of research-driven insights and tools for institutional investors. The stock has a Zacks Rank #1 (Strong Buy) and belongs to a top-ranked Zacks industry (top 29%).

Virtu Financial Inc. (VIRT - Free Report)

The Zacks Rank #1 company offers a technology platform through which it provides quotations to buyers and sellers in securities. It hails from a top-ranked Zacks industry (top 44%).

ETF in Focus

ETF Industry Exposure & Financial Services ETF

The underlying Toroso ETF Industry Index looks to offer exposure to publicly traded companies that derive revenue from the Exchange Traded Funds ecosystem. The fund charges 64 bps in fees. So far this year (as of Mar 13, 2018), the fund is up 11.6% and may gain more in the coming days.

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