ETF Providers Now Control The U.S. Stock Market
- Vanguard could own 30% of U.S. stock market before limit reached: Vanguard, the fastest-growing asset manager with $4 trillion in assets, has plenty of room to expand before it hits potential ownership limits on U.S. stocks. Bloomberg explains Using Apple as a microcosm of the entire U.S. stock market, Vanguard collectively owns 6.3% of the shares, but none of its funds has more than 2%. The biggest holder is the $428 billion Vanguard Total Stock Market Index (VTSMX). As a diversified fund holding good assets, its stake could rise fivefold before running into ownership caps
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Individual shares no longer are the most actively traded securities in the market. That distinction goes to exchange-traded funds, which took in a record $400 billion in the past year to become a $3.8 trillion industry
- After putting a record total of $282 billion into ETFs in 2016, Investors added a whopping $40.1 billion,m in January, leaps and bounds above the $350 million seen in the same month a year ago
- Just how popular are exchange-traded funds? According to data compiled by Credit Suisse, only one of the 15 most heavily-traded securities on the stock market in 2016 was actually a stock. All the rest were ETFs
- Total ETF volume in 2016 rose 17% over 2015 and gained 50% over 2014. That compared to a 7% rise in trading volumes between 2014 and 2016, according to Credit Suisse. There are nearly 2,000 ETF listings, an all-time high, Credit Suisse data show
- Equity ETFs accounted for the bulk of ETF trading. Yet other asset classes are fuelling the growth in trading volume. Trading volumes for commodity-based ETFs — five of which made the top 15 list — accounted for rose 170% compared to 2014, followed by a 100% gain among volatility and other alterative funds and a 70% increase by fixed-income ETFs, according to data from Credit Suisse
- Last year, ETFs accounted for 30% of all U.S. trading in terms of value, and 23% in terms of share volume. The rising popularity has been fueled by convenience and changing trends. The funds offer investors a way to invest in almost any assets class, from stocks and bonds to currencies and commodities, as well as sector, geographic region and strategy. It also plays into the growing focus on passive investing, since the largest ETFs are index funds
- CFRA: “What we are seeing is investors are increasingly using ETFs as a replacement for individual stocks,” said Todd Rosenbluth, director of ETF and mutual funds at CFRA, an independent research provider. “That happened in 2016 and it’s going to continue in 2017 and beyond.”
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How Can We Profit From This New MegaTrend?
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