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Rating:ETF Shops Rake In $6B Per Year Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, October 10, 2016

ETF Shops Rake In $6B Per Year

News summary by MFWire's editors

ETF shops bring in a $6.043 billion annually. The big three account for more than 63 percent of that revenue, and the top ten account for 88 percent.

Dave Nadig
FactSet
Director of Exchange Traded Funds
That's the estimation of FactSet, as of September 2016. Dave Nadig, director of ETFs at FactSet Research Systems, highlights that estimate and more in a recent ETF.com article about "how much money the ETF industry makes." (FactSet owns what used to be the data side of ETF.com, while BATS owns the publishing side and Informa bought the conference side.)

One important note: a potentially important driver of ETF shop's revenue may not factor in to FactSet's estimations here. Nadig explains the estimations as coming from taking "today's assets ... and simply multiply it by the expense" to get what he calls "an 'annual revenue potential' for any given fund." Nadig makes no mention about securities lending, a practice that generates revenue from many ETFs and mutual funds.

Per FactSet's estimation, BlackRock's iShares' [profile] $939 billion in ETF AUM brings in $2.42 billion in annual revenue. SSgA [profile] ($456 billion in ETF AUM, third biggest) brings in $879 million in ETF revenue and is thus second-biggest by revenue, and Vanguard [profile] ($576 billion in ETF AUM, second biggest) brings in $526 million in ETF revenue and is thus third-biggest by revenue. Invesco PowerShares [profile], First Trust [profile], ProShares [profile], WisdomTree [profile], Van Eck [profile], Guggenheim [profile], and Rafferty's Direxion [profile] round out the top 10 ETF shops by revenue.

FactSet also breaks down ETF shop revenue by type. The research shop estimates that plain vanilla ETFs generate $3.79 billion in revenue, 63 percent of total industry revenue. Yet the non-vanilla (i.e. smart beta and the like) ETFs account for the remaining 37 percent of ETF revenue, punching above their weight (as they account for 28 percent of industry AUM).

The full article has more context around FactSet's ETF industry revenue estimates. Fundsters interested in the ETF side of the business should take a look. 

Edited by: Neil Anderson, Managing Editor


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