New York
07 May 2015
Reporter: Stephanie Palmer

ETF assets out-pacing mutual funds, says Broadridge

Growth in exchange traded fund (ETF) assets saw greater growth than long-term mutual funds, in retail investment channels, for the first time in 2015, according to Broadridge.

According to data from Broadridge’s Fund Distribution Intelligence tool, ETF assets sold through independent and wirehouse broker-dealers, registered investment advisors and discount brokerage firms grew by $267 billion, year on year. Mutual fund assets sold through the same channels increased by $255 billion.

Total ETF assets grew by 21 percent, or $379 billion, to reach $2.19 trillion, while mutual fund assets grew by 9.5 percent, or $665 billion, year-on-year.

Registered investment advisors continued to be the leading distributors of ETFs, representing $472 billion in assets, followed by independent broker-dealers, which accounted for $400 billion, and wirehouse firms, which represented $385 billion in assets.

The increase in mutual fund assets was driven mainly by institutional channels. Banks, private banks and trust companies saw a growth in mutual fund assets of 17 percent, or about $410 billion.

Frank Polefrone, senior vice president of Broadridge company Access Data, said: “ETFs are gaining ground among retail distributors driven by a few key factors, namely their low cost structure, but also the fact that ETFs are used in asset allocation models, which are more prevalent among retail advisors.”

He added: “While mutual fund assets continued to grow in the retail channels, this growth was outpaced on an absolute basis by ETFs – the first time this has happened since we started tracking this data more than four years ago.”

Other findings included a 12 percent year-on-year growth in long-term mutual fund and ETF assets under management from third-party distribution channels, which rose to $9.8 trillion.

ETF assets distributed in institutional channels increased by $112 billion, showing less than half the growth in those distributed in retail channels.

Mutual fund assets under management in banks showed the highest year-on-year increase, rising 23 percent, or $147 billion.

Gerard Scavelli, president of Broadridge’s mutual funds and retirement solutions group, said: “Our data not only provides insight into emerging distribution channels that present growth opportunities, but also gives fund firms visibility into their own market share.”

He added: “This intelligence allows firms to improve strategic decisions regarding distribution, product development, and sales and marketing to allocate resources effectively, and accelerate growth.”

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