ETFs keep taking market share away from mutual funds, that much is well-known. In their 2012 review and 2013 outlook for the ETF industry, Deutsche Bank show how the trend away from equity mutual funds and into equity ETFs continued last year:
One place where mutual funds still have control is in fixed income, and the 2012 picture was a kind of continuation of 2011: the hunt for yield saw more money pouring into both fixed income funds and ETFs. The analysts note that “because the debt market is less transparent and less efficient than the stock market,” more opportunities persist for active fixed income managers. But with the entrance of PIMCO last year into ETFs and the general strength of the segment, they compare fixed income ETFs now to where equity ETFs were in 2007.
ETFs are also stealing the focus in the options world. Here are the twenty most active equity, index, and ETF assets ranked by option open interest as of Friday, January 18, 2013. Nine of the them are ETFs, plus VIX. Data from CBOE and Livevol.
|SPY||S&P Depository Receipts||148.33||20562674||3005982|
|^SPX||S&P 500 Index RTH||1485.98||11654074||759853|
|BAC||Bank of America Corporation||11.14||10292004||667215|
|^VIX||CBOE Volatility Index||12.44||6061669||806461|
|EEM||iShares MSCI Emerging Markets Index||44.78||6035349||522400|
|IWM||iShares Russell 2000 Index||88.57||5916652||701350|
|XLF||Financial Select Sector SPDR||17.15||5393977||237629|
|SLV||iShares Silver Trust||30.81||4470132||158040|
|GLD||SPDR Gold Shares||163.09||4393205||385740|
|F||Ford Motor Co.||14.11||3650728||156361|
|VXX||iPath S&P 500 VIX Short-Term Futures ETN||23.98||2718790||405415|
|FXI||iShares FTSE/Xinhua China 25 Index||41.70||2587327||107590|
|JPM||JPMorgan Chase & Co||46.46||2427517||186641|
|S||Sprint Nextel Corp.||5.65||2422433||45316|
In a related vein, several readers have asked recently about which optionable ETFs we trade. The PDF I’ve attached below shows the 65 most active optionable ETFs, sorted by open interest. I wouldn’t have qualms about trading options on anything on the top half of the list, and plenty on the bottom half can be helpful in some situations. Less activity tends to mean wider markets, which also tends to mean that complex spreads are more difficult to execute without giving up any edge.
I think it’s notable that on the day I collected this data, only four assets on the list traded more volume that the much-maligned VXX.