A new report finds that exchange-traded funds (ETFs) are setting their sights on a different part of the DC market.
A Cerulli survey shows more ETF sponsors are focusing distribution efforts on small- and mid-sized DC plans, specifically those with assets less than $250 million. Cerulli explains that, along with the flourishing online advice delivery market, there has been a revived effort to bring ETFs to DC plans. The report says that the DC space may become an area of focus for these firms, especially in areas such as micro plans.
Cerulli notes that the recent decline in mutual fund assets during 3Q 2015 (down 7.2% since June month-end) can be largely attributed to retreating equity markets, and that ETF assets also fell during September, dropping by 2.2% to finish the month at $1.96 trillion. Cerulli notes that those flows were a notable bright spot for the vehicle as they rebounded from a tepid August, reaping $16.7 billion in September.
Oh, and the report also notes that collective investment trusts (CITs) are gaining more attention overall in the industry since their commingling of assets enables CIT sponsors to capitalize on economies of scale, thereby offering lower costs, better risk management, and more flexible investment opportunities.
It won’t be the first — or likely the last — foray for ETFs into the DC market, though those efforts in the past have largely fallen well short of expectations. What’s different this time?
