ETP Growth: Where We Are Now

The Exchange Traded Products industry has experienced remarkable growth over the last 20 years. Since the listing of the first product, SPY, on January 29, 1993, the industry has expanded to now include approximately 1,450 products from over 50 issuers with total combined assets exceeding $1.35 trillion.

To put these figures in perspective, the value of assets in US ETPs is greater than the market capitalization of the top four largest publicly listed companies in the U.S. (Apple, Exxon, Berkshire Hathaway, and Google) combined. In addition to the breadth of products and GDP-like total assets, ETPs have redefined the trading landscape, representing over a quarter of all equity value traded in 2012, and nearly 16% of equity shares traded.

Two types of ETPs in particular have taken off recently.  As “the search for yield” became a major investment theme in 2011, ETP issuers responded by expanding the variety of fixed income products.  In the last two years alone, the industry has produced 71 new passive fixed income products, bringing the total number to 175. Over this two year period, total AUM for fixed income products experienced a 77% increase, rising from $136 billion to $241 billion.

Another ETP type, actively managed ETFs, has grown significantly in number of funds and total assets. Active ETFs are relatively new on the scene, with the first product launching on March 25, 2008, the Bear Sterns Current Yield (Former ticker: YYY). By the end of 2011, there were 37 products that gathered $5.2 billion in total assets.  2012 proved to be a pivotal year for active products, however, as 16 new products listed on NYSE Arca, and AUM almost doubled to $10.3 billion.