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Source: Bianco Research


In my year end column for the WaPo (10 trends to watch in finance for 2013), the very first trend was “ETFs are eating everything.”

Some of the charts nearby, courtesy of Bianco Research, put it into perspective visually.

Just last month, ETF assets passed the $2 trillion dollar milestone.  And today, Schwab announced they are allowing “investors to trade over 100 ETFs commission-free.”

By way of their simplicity, low cost and passive indexing, ETFs are becoming the most dominant product in finance.


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Category: ETFs, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

8 Responses to “The Ongoing Rise of ETF Assets”

  1. Al_Czervik says:

    Eventually, everyone will be an asset allocator and the odds for stock-picking will improve.

  2. Al_Czervik says:

    BTW, today’s QOTD is brilliant. Case in point: Dell

    “I rarely think the market is right. I believe non dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” -Mark Cuban

    I have a theory (perhaps held only by me) that if BRK ever decides to begin paying dividends in the post-WB period, its price would really surge. Their holdings are tremendous cash-generators. Eventually, if they continue to be managed well for the benefit of shareholders, the Law of Large Numbers will cause them to run-out of attractive opportunities and they will be forced to become an income vehicle.

  3. ottnott says:

    “simplicity, low cost and passive indexing”

    Well, that won’t do.

    Time to unleash the lobbyists to attempt to put barriers in the way of the simple and cheap ETFs (can’t let ma and pa buy anything without first receiving a paper prospectus). The backup plan, should Congress fail to understand the dire threat that “cheap and simple” poses to America’s freedom and prosperity, is to have the most complex, expensive, and risky investment vehicles the financial industry can devise be classified as “index ETFs”.

  4. neddyj says:

    barry – any studies done yet on the rapid trading or large block trading of ETFs and the resultant effect on the components of those ETFs? I love that they’re simple and low cost, my concern is that they’re so young still. now that there’s been an explosion in demand for them (and it’s my thinking that the creators of the ETFs keep making more to keep up with demand) – what happens if something goes wrong? What happens there comes a reason, comes a day, that most people want out? A mass of sell orders in ETFs may have an exaggerated effect on stocks, no? Am I being paranoid, or do you think that it is a legitimate concern?

    I know that the same “massive redemption” idea would also cause big problems for mutual funds, but we never saw something like that in real time like we’d see with ETFs….that was always my conspiracy theory with the infamous ‘flash crash’…

  5. VennData says:

    For the people who are ignorant of the SEC’s rules and complain about “Not enough Wall Streeters went to jail” and are angry at Bush’s bailout and angry at Tim Geithner for what ever and hate “Obama’s close ties with Wall Street” – ROFL – be comforted that ETFs are destroying Wall Street.

    Oh and without HTF tools, Authorized Participants can’t use their market tools to keep ETFs at their correct NAV. So sorry, you have to keep on irrationally hating HFT.

    But it’s OK, being ignorant and angry is what built the Republican Party.

  6. DRR says:

    “investors to trade over 100 ETFs commission-free.”

    We are all becoming traders-the days of a stock being long term value investment are over. Real equity value will be taken private using cheap debt..a.k.a Dell.

    Common stocks for common folk!

  7. [...] The Ongoing Rise of ETF Assets (The Big Picture) [...]

  8. Joe McMullen says:

    Leveraged ETFs make use of otc performance swaps. The issuers of these are relatively few, the sums are large, and shares (or cash) settle via an exchage, although the swaps do not. Additionally swaps may permit setttlement in either cash or shares, requiring the market maker to buy or sell shares over very short time frames.

    Has FASB 133 has addressed this specifically?