LAKE SUCCESS, N.Y.,
Jan. 26, 2017 /PRNewswire/
-- The usage of passive investment products, ETFs and index
funds, hits all-time highs in 2016, driven by third-party
distribution channel sales from broker-dealers (B/D), registered
investment advisors (RIAs) and banks. These channels represent
almost $10.5 trillion in long-term
funds and ETFs tracked by Broadridge Financial Solutions, Inc.
(NYSE:BR) via its Fund Distribution Intelligence, the most complete
sales and asset data collection in the industry, and the only view
of asset flows by distribution channel.
For 2016, more than $610 billion,
or 85 percent of the $724 billion of
net new asset flows through third-party channels went into index
funds or passive ETFs. Advisor driven channels – independent
broker-dealers, wirehouse firms, RIAs and discount brokerage firms
– saw almost 82 percent of net new assets flow into passive funds
and ETFs. Institutional third-party channels – banks, private banks
and trust departments - had 90 percent of net new flows into
passive products.
"The move to lower fee products by fee based advisors and banks
continues to drive the growth of passive products, with index funds
representing 28 percent of net new flows and passive ETFs 57
percent of new flows," said Frank
Polefrone, senior vice president of Broadridge's data and
analytics business. "This shift is impacting both distributors and
fund manufacturers, resulting in changes to distributor's product
menus, development of new 'clean share classes' by active fund
managers, and a broader use of ETFs for advisor managed
portfolios." Mr. Polefrone continued, "Fund firms with a wide
selection of both active and passive products will continue to have
success. Active managers with unique products will also stand out
and continue attracting assets."
Passive Dominates 2016 Net New Assets in Third-Party
Channels
Third-party channels now have a higher
percentage of passive products than passive products across all
funds. They have 36.3 percent of assets in passive products, up
from 32.6 percent just a year ago. This is compared to overall fund
assets (excluding money market funds), which shows 30 percent in
passive products. The increase of passive products for third-party
channels is driven to a large degree by advisor's adoption of ETFs
as a primary investment vehicle for client portfolios, and the use
of ETFs for robo-advisors. In the last 5 years, passive products
distributed by third-party channels has grown from a little over a
quarter in 2012 (26.9 percent) to over a third in 2016 (36.3
percent).
For 2016, overall net new assets for ETFs increased by
$405 billion, or 18.4 percent to
$2.6 trillion. The largest increase
for 2016 occurred in the RIA channel, with net new assets of
$116 billion, up 20 percent. Net
new assets for mutual funds were also up in the RIA market, with
net new fund assets of $41 billion,
or 2.6 percent for total fund assets of $1.64 trillion. The RIA channel is the largest
retail channel with combined fund and ETF assets of $2.33 trillion. The independent broker dealer
(IBD) channel is slightly behind with $2.29
trillion, but with fewer assets in ETFs ($514 billion) and more in funds ($1.78 trillion).
Additional key findings include:
- Net new long-term fund assets YTD ending December 2016 was up $319
billion, or 4.4 percent.
- Passive products for retail channels – RIA, IBD, wirehouse and
discount B/D – were up by $403
billion in the third quarter (+24 percent), while net new
assets for passive products for the institutional channels –
private bank, bank and trust – increase by $208 billion (+15 percent).
- Net new assets for retail long-term active funds were up by
$89 billion (+2 percent), while
institutional long-term active fund net flows increased by
$24 billion (+1.3 percent).
About Broadridge
Broadridge Financial Solutions, Inc. (NYSE:BR) is the leading
provider of investor communications and technology-driven solutions
for broker-dealers, banks, mutual funds and corporate issuers
globally. Broadridge's investor communications, securities
processing and managed services solutions help clients reduce their
capital investments in operations infrastructure, allowing them to
increase their focus on core business activities. With over 50
years of experience, Broadridge's infrastructure underpins proxy
voting services for over 90 percent of public companies and mutual
funds in North America, and
processes more than $5 trillion in
fixed income and equity trades per day. Broadridge employs
approximately 10,000 full-time associates in 16 countries. For more
information about Broadridge, please visit www.broadridge.com.
Media
Contacts:
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|
|
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Linda
Namias
|
Joe
LoBello
|
Broadridge Financial
Solutions
|
Brainerd
Communicators, Inc.
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+1
631-254-7711
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+1
212-986-6667
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linda.namias@broadridge.com
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lobello@braincomm.com
|
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SOURCE Broadridge Financial Solutions, Inc.