According to a research note produced by Deutsche Bank last week, institutional investors in the US now hold 53% of all ETF assets versus 47% for retail investors as institutions like brokers, registered investment advisors, hedge funds and mutual funds push further into the ETF space. Institutional use of ETFs has been rising steadily over the last decade, with 2,545 institutional investors owning ETFs at the end of 2011 versus just 405 in 2000.
The data snapshot shows total ETF holdings at the end of 2011 and it also highlights a few key trends (broken down by Ari Weinberg at Forbes):
Advisors top the list – With holdings of $237 billion, investments hold about 25.3% of ETF assets for their clients.
Retail loves leverage – Retail investors are the main holders of inverse and leveraged ETFs, including 3x inverse and 3x leveraged products. It’s a worrying trend for Brendan Conway over at Barron’s who wrote this blog about “the little guy’s love affair with these high-octane products.”
Institutions go big – The largest ETFs (those with other $20 billion in assets) are favoured by institutional investors who own 63% of them.
CalPERS goes small – The pension giant holds 71% of SPDR S&P Emerging Market Small Cap. If one of the world’s biggest investors is expressing its views on the asset class, it could mean more pension funds choose this route in the coming years.
There could be more — Deutsche has cautioned that the research is based solely on US federal 13F filings that filed by institutional investors with holdings of over $100 million – that means institutions could actually be underrepresented in the data.