Lighthouse Investment Management
ETF Report - US listed - June 2013 Page 3
Since the 'birth' of the first ETF (Exchange-Traded Fund) in 1993 their march towardssuccess has been uninterrupted. As of February 2013, US listed ETF's containedover $1.4 trillion in assets under'management'
.With more than $9 trillion in managedassets
, US mutual funds are stillcommand a much larger pile. However,outflows from mutual funds investing indomestic equities have persisted over thelast 6 years.Investors, discouraged byunderperformance of actively managedfunds, are switching to ETF's withsignificantly lower fees than comparablemutual funds.It is fair to assume ETF's will continue togrow rapidly and will impact marketperformance due to their sheer size.To get insights into investors behavior welook at flows in and out of the 20 largest ETF's, covering over 40%of all ETF assets.Looking simply at assets under management is misleading, sinceperformance can have a significant impact on the value of assets.We therefore look at pure flow data, ignoring the impact of performance. For example: the 57% increase in assets for EEM(Emerging Markets ETF) could be entirely due to performance, orflows or a mix of both. The increase in assets of ETF's tracked from $520bn to $605bn from July 2012 toJanuary 2013 consisted of $40bn of inflows and $45bn in performance.
Source: Morningstar Direct US Open-end asset flows update, January 2013
Excluding $2.6 trillion in US Money Market Mutual Funds