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Data from the Advisor Perspectives (AP) Universe shows trends in high- and ultra-high net worth investors whose assets are managed by Registered Investment Advisors (RIAs). Periodically, we look at usage in index funds and ETFs throughout the AP Universe.
This study updates two previous studies:
June 30, 2007
September 30, 2007
March 4, 2008
and looks at index fund and ETF usage in the AP universe as of July 31, 2008. We use data from Index Universe for the classification of index funds and ETFs.
Significant findings from this study include the following:
- ETFs hold almost twice the assets of index funds (63.5% versus 36.5%). ETF assets decreased from 70.3% to 63.5% over the prior five months.
- ETFs and Index Funds now represent 31.5% of total mutual fund assets, down slightly from 32.9% on 2/28/08, and up from 29% on 9/30/07 and 27% on 6/30/07.
- ETFs and Index Funds now represent 6.9% of total marketable securities in the AP Universe, up from 6.4% on 2/28/08, and from 4.6% on 9/30/07 and 3.9% on 6/30/07.
- Holdings tied to broad-based indices increased, but still represent a relatively small portion of overall assets in the AP Universe. Holdings tied to the S&P 500 increased from 24.5% to 27.0% of total mutual fund assets from 2/28/08 to 7/31/08. Holdings tied to the EFA decreased from 20.4% to 13.8% over the same time period. Holdings tied to the total market increased slightly, from 4.3% to 5.1%.
- Holdings in sector-based ETFs decreased consistently from 9/30/07 to 2/28/08 (as a percentage of mutual fund assets) and continue to remain a small percentage of ETF holdings.
Across the mutual fund industry, index funds and ETFs represent approximately 15% of assets. It is noteworthy that index and ETF holdings as a percent of total assets in the AP Universe (at 6.9% and on the rise) are still significantly below the 15% level.
The AP Universe consists of approximately $50 billion of assets held in approximately 50,000 individual accounts. The average account size in the AP Universe is $901,000. Data from the AP Universe is divided into three tiers based on account size. In the tier containing the largest accounts, the average account size is $3.5 million, and assets in this tier represent 94% of the assets in the AP Universe. Investors hold multiple accounts, and HNW and UHNW investors typically hold 10-20 or more accounts. For this reason, the AP Universe reveals trends predominantly in the UHNW segment.
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