Total exchange-traded fund (ETF) assets hit an all-time high of USD2.2 trillion in 2015, driven by the continued growth in popularity of passive investment vehicles, according to quarterly data released today by Broadridge Financial Solutions.
Comparatively, total long-term mutual fund assets held by financial intermediaries decreased by USD161 billion to USD7.29 trillion in the full year of 2015, while ETF assets increased by USD124 billion in the same period.
"The increased usage of passive investments across all distribution channels accelerated in 2015. Our analysis shows that passively managed index and ETF assets increased by two percent during 2015, while actively managed funds and ETFs saw a one percent decrease," says Frank Polefrone, senior vice president of Broadridge's data and analytics business. "We expect this trend to continue in 2016, as the increased usage of ETFs and index funds continues for core allocations."
According to Broadridge's Fund Distribution Intelligence findings, retail distribution channels experienced a larger increased usage of passive products, with an increase of 2.6 per cent, versus institutional channels which increased by 1.6 per cent. This increase brought the usage of passively managed products to 31 per cent across all channels, a two percentage point market share increase during 2015.
With an increased use of both index funds and ETFs by advisors and in model portfolios, passively managed fund and ETF assets increased to 26 per cent of overall fund and ETF assets held by retail distributors over the past year. Among retail channels, registered investment advisors and online retail shareholders utilising discount brokerage firms are the largest users of passive products at 30 and 58 per cent respectively. Alternatively, independent broker dealers continue to be the highest users of active funds, holding more than 80 per cent in active investments.