Broadridge Financial Solutions, Inc. (NYSE:BR), a provider of investor communications and technology solutions, has reported data for exchange-traded funds (ETF) in the 2016 fiscal year.
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In particular, ETF assets climbed to an all time high of $2.6 trillion, up 18.1% YoY from $2.2 billion in the 2015, or $405 billion over a YoY basis, as measured by Broadridge’s Fund Distribution Intelligence (FDI) tool. The growth was driven by an increase in third-party distribution channel sales from broker-dealers (B/D), registered investment advisors (RIAs), and banks.
Broadridge’s FDI utility helps aggregate a variety of information into a unified sales and asset data collection, tracking performance of both mutual funds and ETF assets. The FDI tool collects data on a monthly basis, which is then analyzed by respective channel, geography, etc.
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In addition, during 2016, ETFs and Index Funds constituted 85.0% of Net New Assets for Third-Party Channels. Over the entirety of the calendar year, more than $610 billion of net new assets flowed through third-party channels went into index funds or passive ETFs.
Advisor driven channels, i.e. independent broker-dealers, wirehouse firms, RIAs and discount brokerage firms, also secured a growth of 82.0% YoY of net new assets flow into passive funds and ETFs.
According to Frank Polefrone, Senior Vice President (SVP) of Broadridge’s data and analytics business, in a recent statement on the 2016 findings: “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.”
“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,” he reiterated.