Visualising the expanse of the ETF universe

Keep it brief

  • The ETF universe has an astonishing $5.75 trillion in assets under management (AUM), covering almost every niche.
  • Equities are by far the largest galaxy in the ETF universe, making up 76.4% of all assets, however the fastest expanding galaxy is bond ETFs.1
  • In this infographic we explore the wide scope of assets covered by the ETF universe.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. You may not get back the amount originally invested.

BlackRock | The universe of ETFs is rapidly expanding: The global AUM has increased five-fold in the past decade. BlackRock | The largest single galaxy of the ETF Universe is in funds that track market cap equity indices. BlackRock | ETF sector and thematic indicies BlackRock | The global money market AUM is 36B BlackRock | In recent years, bonds have been one of the fastest-growing segments of the ETF market BlackRock | Alternatives BlackRock | ETF alternative and commodity indices

Visualising the expanse of the
ETF universe

Under the right circumstances, an innovation can scale and flourish.

Within the financial realm, there is perhaps no better example of this than the introduction of exchange-traded funds (ETFs), a new financial technology that emerged out of the index investing phenomenon of the early 1990s.

Since the establishment of the first U.S. ETF in 1993, the financial instrument has gained broad traction — and today, the ETF universe has an astonishing $5.75 trillion in assets under management (AUM), covering almost every niche imaginable.

Navigating the ETF universe

To start, let’s look at a macro breakdown of the “galaxies” that can be found in
the universe:

Global ETFs (AUM, $USD)Share of Global Total
Equities $4.39 trillion 76.4%
Bonds $1.12 trillion 19.5%
Alternative $0.20 trillion 3.5%
Money market $0.04 trillion 0.6%
All ETFs $5.75 trillion 100.00%

As you can see, equities are by far the largest galaxy in the ETF universe, making up 76.4% of all assets. These clusters likely comprise the ETFs you are most familiar with — for example, funds that track the S&P 500 index or foreign markets.

That said, it’s worth noting that the fastest expanding galaxy is bond ETFs, tracking indices related to the debt issued by governments and corporations. The first bond ETFs were introduced in 2002, and since then the category has grown into a market that exceeds $1 trillion in AUM. Bond ETFs are expected to surpass the $2 trillion mark by 2024.

Everything under the sun

While the sheer scale of the ETF universe is captivating, it’s the variety that shows you how ubiquitous the instrument has become.

As of 30 September 2019, there were over 8,000 ETFs globally, covering nearly every asset class imaginable. Here are some of the lesser-known and more peculiar corners in the ETF universe:

Thematic ETFs:
Gaining popularity in recent years, thematic ETFs are built around long-term trends such as climate change or rapid urbanization. By having more tangible focus points, these funds can also appeal to younger generations of investors.

Contrarian ETFs:
In a healthy market, a variety of different positions are taken by investors. The broad universe of ETFs avaliable make it possible for investors to take different or contrarian views and bet against 'the heard'.

Factor-based ETFs:
This approach uses a rules-based system for selecting investments in the fund portfolio, based on factors typically associated with higher returns such as value, small-caps, momentum, low volatility, quality, or yield.

Global Macro ETFs:
Some ETFs are designed to mimic strategies used by hedge fund managers. One example of such a strategy is global macro, which aims to analyze the macroeconomic environment, while taking corresponding long and short positions in various equity, fixed income, currency, commodities, and futures markets. A short position is the opposite of a long position. A short position is when an investor sells a security with a view that the price of the asset will fall in the value, rather than rise. Short positions intrinsically carry more risk than long positions as the losses are technically infinite as stock prices can go up without limit, while a for long position the liability is limited to the value of the stock as it can only fall by 100%.

Commodity ETFs:
There are ETFs that track gold or oil, sometimes even storing physical inventories. Interestingly, however, there are commodity ETFs for even more obscure metals and agricultural products, such as zinc, lean hogs, tin, or cocoa beans.

Whether your investments track popular market indices or you are more surgical about your portfolio exposure, the ETF universe is impressively vast — and it’s projected to keep expanding in size and diversity for years to come.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any financial instrument or product or to adopt any investment strategy.

1Source: BlackRock as of 09/30/2019. AUM includes the entire exchange traded product category, which encompasses any portfolio exposure that trades intraday on an exchange. AUM excludes Middle East and Africa. All $ values are in USD.