Exchange-traded funds are growing in popularity, and a new report from Cerulli Associates says that an increasing number of asset managers are finding new ways to incorporate them into their plans.
The domestic ETF market reached $2 trillion late last year, Cerulli reports, more than doubling its assets under management since the end of 2010. And nearly 62% of ETF sponsors are developing active ETF funds, while 54% are beginning to incorporate strategic beta ETFs.
Firms are adding ETF products by refocusing existing investment strategies as ETDs, or by attempting to buy up existing distribution infrastructure from smaller ETF-focused firms, according to the report. Eaton Vance, for example, is offering 18 different funds that will mostly mirror mutual fund strategies already in place. Meanwhile, Precidian Investments has asked the SEC to green-light its non-transparent ETF structure.
The report recommends that ETF-focused fund managers acquire existing ETF firms, noting that Janus, New York Life and Victory Capital have already swallowed up established companies in order to expand their own offerings without having to build the infrastructure from scratch.
Other large active managers are trying to get into the ETF marketplace, but they have different ways of going about it. For example, American Funds filed for exemptive relief for both active and non-transparent active ETFs, while J.P. Morgan Asset Management is focusing heavily on strategic beta investments. The ETFs that J.P. Morgan launched in 2014 have already grown to over $60 million in assets, the Cerulli report says.
