Vanguard, State Street Aim For Bigger Share of ETFs
July 23, 2007
Although Barclays Global Investors runs $301 billion in exchange-traded fund money through 137 funds- commanding a 60% share of the $500 billion ETF market-Vanguard and State Street are launching new products and marketing campaigns to catch up, Reuters reports.
For its part, with $102 billion in assets and 59 ETFs, State Street has a 20% market share and, with $30 billion and 32 ETFs, Vanguard a 6% market share. But they believe they can close in on Barclays.
"Those two are really the two other major players, and they are becoming much stronger competitors," said Jim Wiandt, publisher of IndexUniverse.com. "There's a much stronger attack coming, definitely the most serious challenge BGI has faced since it established its hegemony" with the first ETF, the SPDR, based on the S&P 500 Index, in 1993.
As an indication of a shift in the tide, Vanguard attracted $6.3 billion in its ETFs through May, compared to $8.6 billion throughout all of 2006. It also charges only 18 basis points for its ETFs, compared to Barclays' 43 basis points.
Meanwhile, other ETF providers, many of which have carved out small niches from major indexes, or are weighting them differently to create so-called "enhanced" indexes, are also making strides. PowerShares Capital Management, now has $14 billion in ETF assets, or a 2.8% market share, and WisdomTree Investments has $4 billion, or a 0.8% market share.
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