Institutional Users of ETFs and ETPs in 2012

Author Name: 
Deborah Fuhr

WFE Sept 2013

Over the past 15 years the number of institutional investors that reported using Exchange Traded Funds (ETFs) or Exchange-Traded Products (ETPs) increased 2,086%, rising from 154 in 1997 to 3,367 institutions located in 50 countries in 2012 based on our recent analysis of regulatory filings and mutual fund holdings as collected by Thomson Reuters/Lipper[1] and documented in our new report “ETFGI Institutional Users of ETFs and ETPs, 2012 Review”.

At the end of 2012, the global ETF/ETP industry had 4,728 ETFs/ETPs, with 9,707 listings, assets of US$1.95 trillion, from 206 providers listed on 56 exchanges. The 10 year compound annual growth rate (CAGR) of global ETF and ETP assets at the end of 2012 was 29.6%. ETFs and ETPs listed in the United States accounted for 69.2% of the total assets at the end of 2012.

Many people think ETFs and ETPs listed in the United States are predominately a retail product. Our findings show that institutional investors still account for the majority of the use of ETFs/ETPs in the United States as measured by assets held. At the end of Q4 2012, 51% of the US$1.35 trillion invested in ETFs and ETPs listed in the United States was reported in holdings by institutional investors based on our recent analysis of regulatory filings and mutual fund holdings as collected by Thomson Reuters/Lipper. Institutions reported holding 53% of all US listed ETF assets and 35% of all US listed ETP assets.

Regulatory filings and mutual fund holdings are the only public source of share ownership data as ETFs and ETPs are not held in bearer name. From experience in travelling to over 50 countries educating institutional investors on the use of ETFs and ETPs and other investment products we know that there are institutions that use ETFs/ETPs that are not required to report their holdings through any of the regulatory filings or mutual fund holdings that Thomson Reuters/Lipper collect.

The reported institutional vs retail ownership of US listed ETFs is 53% institutional and 47% retail (retail being an investor in ETFs with assets below $100 million). We would estimate the actual spilt in the use of US listed ETFs is closer to 60% institutional and 40% retail. Many institutions that use US listed ETFs are located in countries outside of the US. In many countries US listed ETFs are registered for sale and in many cases also cross listed. ETFs are currently listed in 45 countries, while US listed ETFs are cross listed in the following 8 countries Mexico (390); Chile (104); Peru (2); the Netherlands (1); Australia (21); Japan (1 and 3 ETF JDRs); Hong Kong (2) and Singapore (5).

Reported ownership of ETFs and ETPs listed globally at the end of Q4 2012 accounted for 38% of the US$1.9 trillion invested in ETFs and ETPs. This shows that the regulatory filings and mutual fund holdings for US securities capture a greater percentage of overall assets relative to other countries.

Our report provides a detailed examination of the use of ETFs and ETPs by institutional investors globally from 2005 through 2012. ETFs have been one of the most useful financial innovations developed in the past 25 years. ETFs are a democratic product, or as some have called them ‘a disruptive product’, offering an array of exposures - to developed, emerging and frontier markets and various asset classes by a transparent, liquid, cost efficient means, and with a minimum investment size that makes them appeal to institutional, financial advisors and retail investors, which is very unusual in the financial industry.

From 2005 – 2012 there has been a 92% increase in the number of institutions reporting using one or more ETFs or ETPs, rising from 1,752 institutions globally in 2005 to 3,367 in 2012. The reported use of ETFs and ETPs has grown at 6.9% CAGR over the past five years through 2012.

Managers of ETFs and ETPs have always struggled to obtain data on investors globally using or holding their ETFs and ETPs, the investors using or holding their competitors ETFs and ETPs, and on the universe of current and potential investors worldwide. One option has been to hire an investor relations service that can, over a number of months, investigate using share registrars and custodians to obtain data on one, some or all of their ETFs and ETPs, though fees for this type of custom service can be upwards of €5,000 per ETF for a one-time analysis.

In our reports we make a distinction between Exchange Traded Funds “ETFs” and other Exchange Traded Products “ETPs”. ETFs are defined as:

  • In the United States, by the Securities and Exchange Commission (SEC), ETFs are registered under the 1940 Act as either an open-end investment company (generally known as “funds”) or a unit investment trust. An ETF is a fund that allows an investor to buy and sell shares in a single security that represents a fractional ownership of a portfolio of securities.

The term “ETF” does not cover other types of exchange-traded products (ETPs) such as exchange traded notes (ETNs), exchange-traded commodity funds, equity linked notes, grantor trusts and exchange traded vehicles (ETVs), among others.

In Europe, a UCITS ETF is a UCITS (“Undertakings for Collective Investment in Transferable Securities”) where at least one unit or share class of which is traded throughout the day on at least one regulated market or Multilateral Trading Facility (MTF) with at least one market maker which takes action to ensure that the stock exchange value of its units or shares does not significantly vary from its net asset value and where applicable its indicative net asset value.

Majority of users are institutions

Institutional investors around the world using ETFs and ETPs have grown at 6.9% CAGR over the past five years through 2012. Some 3,367 institutional investors in 50 countries reported using at least one ETF or ETP in 2012. The top five countries in 2012 with the largest number of ETF and ETP users are the United States, the United Kingdom, Germany, Switzerland and Canada, representing 81.9% of total global users.

In 2012 the top four types of firms reporting holding ETFs and ETPs were: 1) Investment advisors; 2) Investment advisors/hedge funds; 3) hedge funds; and 4) banks and trusts. Thomson Reuters’ has 18 categories of firm types. The 5-year CAGR of 8.9% for “Investment Advisors” makes them both the largest user segment, with 2,001 firms in 2012, and the fastest growing segment. 60 brokerage firms reported holding ETFs/ETPs in 2012, and as such they are ranked 5th highest in absolute number of firms reporting holding ETFs/ETPs, but 2nd based on a 7.9% five year CAGR.

The ETF success story is one of unprecedented growth over 20 years. In fact, the compound annual growth rate (CAGR) in assets invested in ETFs and ETPs has been 29.6% over the past decade through 2012. From 2005 through the end of 2012 the number of ETFs grew by 642% rising from 450 to 3,338, while the assets in ETFs increased 321% from US$417 billion to $1.75 trillion US dollars. The number of ETPs has grown from 56 to 1,390, while assets have increased 2,067% from US$9 billion to US$195 billion. Worldwide, ETFs and ETPs breached the $2 trillion milestone early in 2013.

To put these numbers in perspective, it took ETFs in the United States 18 years to accumulate US$1 trillion while it took mutual funds 66 years.

ETFs and ETPs will continue to grow in number, assets and users. ETFs, which are a form of mutual fund, are designed to provide quick and easy access to a range of exposures, including equity, fixed income, commodities and so-called alternative exposures. These products have developed from niche financial instruments to ones used regularly by all market participants to implement a broad array of investment strategies.

As a growing number of investors find it increasingly difficult to discover active managers who consistently deliver alpha, many are turning to ETFs as a solution. Similarly, those who were successful cherry pickers previously are, in today’s market, faced with unprecedented risk - systematic, company specific and geopolitical to name a few. According to Standard and Poor’s, 63% of active large-cap managers in the US did not beat the S&P 500 index in 2012.

The venerable SPDR S&P 500 (SPY US) tops the ETF/ETP list as the product held by the most firms globally in 2012. The SPDR, which was the first US ETF to list in 1993 and subsequently launched an industry, continues to attract the lion’s share of ETF/ETP assets because it is a product that delivers a simple, transparent and liquid way to gain exposure to 500 diverse stocks in one inexpensive trade. Similarly, the SPDR Gold Trust (GLD US), which is the second most widely held ETF/ETP globally, allows investors to purchase exposure to gold bars (a trade not available to many investors, especially financial advisors and retail prior to GLD’s launch in 2004). ETFs are democratic tools providing institutions, financial advisors and retail investors with the same easy-to-access product at the same annual cost regardless of the investors’ size or scale, all of which makes ETFs/ETPs alluring products.

62% of ETF/ETP users captured in 2012 reported holding five or more different ETFs/ETPs in their portfolios, 30% (or 1,007 firms) reported holding 20 or more, while 5% (or 169 firms) reported holding 100 or more.

91%, or 3,048 firms, reported using ETFs and ETPs for equity exposure, while 56% reported holding commodity ETFs/ETPs, and 48% used fixed income exposures. The use of mixed asset class ETFs/ETPs grew the fastest at a 138% 5-year CAGR, fixed income at 27%, commodities at 19%, followed by currencies at 18% and equities at 6%.

Reviewing ETF and ETP users by size of total reported assets (not just ETF and ETP assets), we see that the use of ETFs and ETPs is most prevalent amongst the largest firms with the use declining as firm size declines.

There are 90 firms with reported assets of over US$50 billion, collectively totalling US$12 trillion under management. 68% of those 90 firms reported holding ETFs/ETPs, while the $ amount they held accounted for 34.6% of all reported ETF and ETP holdings in US$ in Q4 2012.

The percentage allocated to ETFs and ETPs tends to be greater for smaller firms. Firms with overall assets of US$250 – 500 million allocated 5.5% of their assets to ETFs and ETPs while firms with overall assets of US$50 billion allocated 2.1% of their assets to ETFs and ETPs.

Most investors, after trying ETFs/ETPs, typically embrace using more ETFs/ETPs in larger sizes, for various asset class exposures and for longer time horizons.

The chart below shows the top 10 “Bank and Trust” investors based on assets invested in ETFs and ETPs in Q4 2012, including the number of ETFs/ETPs held, the dollar value of the assets held and the allocation the equity, fixed income, commodity and other ETFs/ETPs.





Reported ETF/ETP Holdings
US$ Mn

% Equity

% Fixed Income

% Commodity

% Other

Wells Fargo Bank, N.A.

 United States







JPMorgan Private Bank (United States)

 United States







BMO Harris Bank N.A.

 United States







SunTrust Bank

 United States























Wilmington Trust Investment Management

 United States







Comerica, Inc.

 United States







Mizuho Trust & Banking Co., Ltd.








Bank of Tokyo-Mitsubishi UFJ, Ltd.








Source: Thomson Reuters, ETFGI.  Note: “Bank and Trust”: These firms perform all of the functions of a retail bank. As a retail bank, a portfolio of investments are put together by an investment adviser and sold in units to investors by brokers. They may also handle Trust Accounts, which are outside companies or individuals that have a bank manage their money for their own pensions or for various other reasons. They invest the money their customers hold in their accounts in order to make interest payments and their own profits (Thomson Reuters definition).

We expect the use of ETFs and ETPs to continue to grow among investors globally and the CAGR over the next 5 years to be in the 20 – 25% range. This would see assets in the global ETF and ETP industry more than double by the end of 2016.

Drivers of growth

  • Product features: easy to use; liquid; transparent; cost efficient access.
  • Growth in indexing.
  • Access to markets and asset classes that were otherwise not easily available.
  • Growth in new products: new asset classes; new market segments; new benchmarks; and actively managed ETFs. 
  • Expansion to new markets with local products, registrations and cross-listings.
  • Growth in users: institutional; financial advisors and retail.
  • Growth in ways products are used: multi-asset investing; ETF only portfolios; and 401K plans.


2012 ETF and ETP Users by firm type, and by region







Source: Thomson Reuters, ETFGI.


Historical reported ETF/ETP holdings: global
























# Firms


















(US$ Mn)

















Source: ETFGI, Thomson Reuters. Note: #Firms reflects the number of firms reported holding one or more ETF or ETP in any of the 4 (quarterly) periods in each year. Q4-Holdings reflects the US dollar value of reported ETF and ETP holdings for just the Q4 reporting period only (Q4 is isolated as we do not combine $ values from different reporting periods).


Deborah Fuhr

Managing Partner


60 Gresham Street

London, EC2V 7BB United Kingdom

Mobile +44 777 5823 111

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[1] The Thomson Reuters Ownership data feed provides the most comprehensive collection of global institutional holdings across 70+ countries covering 13F institutions, mutual, pension, and insurance funds, declarable stakes holders and U.K. share registers.