FTSE Hits Century Mark for North American ETFs

ETF Trends

Global index provider FTSE on Thursday said there are now more than 100 ETFs listed in North America that are tied to its benchmarks.

The latest ETF based on a FTSE index is EGShares EM Dividend High Income (EMHD), which launched Thursday. It tracks the FTSE Equal Weighted Emerging All Cap ex Taiwan Diversified Dividend Yield 50 Index, which is designed to deliver a broad basket of securities across emerging market countries that have been screened for high dividend yields. [New Dividend ETF for Emerging Markets]

In total, 11 ETF firms in the United States and Canada offer 102 products tracking FTSE’s equity, fixed income, real estate, yield and alternative weighted indices, the benchmark provider said. Globally, FTSE-linked ETFs are offered by nine of the top ten issuers.

“Asset managers are looking for more ETF-appropriate indices,” said Jonathan Horton, president of FTSE Americas and head of FTSE’s ETP service unit, in an interview. “We’re increasingly working with ETF issuers to develop index solutions.”

He said there are two key trends in the global ETF business. The first is asset concentration, with the bulk of the inflows stilling going to the largest firms. For example, BlackRock, State Street and Vanguard together account for more than 80% market share. [ETF Business Getting Less Top-Heavy as Inflows Rise]

Yet Horton noted that fragmentation is another trend as smaller providers introduce more ETFs. For index providers, this means opportunities to develop niche benchmarks and to work with providers to develop liquid solutions.

Although most equity ETF assets reside in funds hitched to benchmarks that weight individual stocks by market cap, there is also growing demand for so-called smart-beta indices, he added. These next-generation indices weight stocks by economic factors that show real and sustainable performance rewards, based on academic research. [Schwab to Launch Its First Fundamentally Weighted ETFs]

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