Growth of ETFs drives increased allocation of passive products in retail distribution channels
LAKE SUCCESS, N.Y., Jan. 28, 2016 – Total exchange-traded fund (ETF) assets hit an all-time high of $2.2 trillion in 2015, driven by the continued growth in popularity of passive investment vehicles, according to quarterly data released today by Broadridge Financial Solutions, Inc. (NYSE:BR) via its Fund Distribution Intelligence. Comparatively, total long-term mutual fund assets held by financial intermediaries decreased by $161 billion to $7.29 trillion in the full year of 2015, while ETF assets increased by $124 billion in the same period.
“The increased usage of passive investments across all distribution channels accelerated in 2015. Our analysis shows that passively managed index and ETF assets increased by two percent during 2015, while actively managed funds and ETFs saw a one percent decrease,” said Frank Polefrone, senior vice president of Broadridge’s data and analytics business. “We expect this trend to continue in 2016, as the increased usage of ETFs and index funds continues for core allocations.”
According to Broadridge’s Fund Distribution Intelligence findings, retail distribution channels experienced a larger increased usage of passive products, with an increase of 2.6 percent, versus institutional channels which increased by 1.6 percent. This increase brought the usage of passively managed products to 31 percent across all channels, a two percentage point market share increase during 2015.
With an increased use of both index funds and ETFs by advisors and in model portfolios, passively managed fund and ETF assets increased to 26 percent of overall fund and ETF assets held by retail distributors over the past year. Among retail channels, registered investment advisors and online retail shareholders utilizing discount brokerage firms are the largest users of passive products at 30 and 58 percent respectively. Alternatively, independent broker dealers continue to be the highest users of active funds, holding more than 80 percent in active investments.
Additional key findings include:
Broadridge’s Fund Distribution Intelligence comprises the most complete sales and asset data collection in the industry, creating transparency into more than $9 trillion of long-term mutual fund and ETF assets across a majority of mutual fund distributors.
Broadridge Financial Solutions, Inc. (NYSE:BR) is the leading provider of investor communications and technology-driven solutions for broker-dealers, banks, mutual funds and other corporations. Broadridge’s investor and customer communications, securities processing and managed services solutions help clients reduce their capital investments in operations infrastructure, allowing them to increase their focus on core business activities. With over 50 years of experience, Broadridge's infrastructure underpins proxy voting services for over 90% of public companies and mutual funds in North America and processes on average $5 trillion in equity and fixed income trades per day. Broadridge employs approximately 10,000 associates in 14 countries.
For more information about Broadridge, please visit www.broadridge.com.
Broadridge Financial Solutions
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