As Exponential ETFs says, the ETF industry is dominated by goliaths, but there’s a slew of smaller firms like Exponential ETFs that think they can take advantage of their size to engage further with the investment community and to discuss topics and ideas that others don’t touch.
One of its most recently launched ETF, the Reverse Cap Weight ETF, provides rules-based exposure to the S&P 500 constituents while tilting that exposure away from the mega-cap and
momentum biases inherent in market cap weighing.
Kevin Quigg, chief strategist at Exponential ETFs, who previously headed SPDR’s ETF’s global sales strategy at State Street Global Advisors, explains how he anticipates the ETF market and
the landscape of participants to evolve, the new records ETFs will certainly break in 2018 and the need to stay interconnected with clients.
What were some of the main trends in 2017 for ETFs?
From my perspective the two main stories of 2017 were the continued entrance into the ETF market by traditional mutual fund companies and the continued success and growth of “non-
traditional” products. The addition of large asset management firms into the ETF industry will not only increase competition but will also allow ETF investors to access the sizeable resources, including educational, that these firms bring. The continued success of non-traditional products (I.E. non capitalization weighted index funds) promotes further innovation in the industry and
adds to the choice available to investors.
What do you anticipate for 2018?
I think we will see the continuance of a couple of trends in 2018. We will continue to see new entrants into the market through either new venture or acquisition. Smart-beta products that weight areas of the market by something other than company size will continue to see asset growth. The ETF industry will end 2018 at all-time asset highs.
What will be in store at your firm for 2018?
As we continue to grow, our main goal is to assure that we continue to build awareness in the market of Exponential ETFs products and services. We are constantly evolving in reaction to what is important to our clients. Recently this has led to a sharp focus on becoming more varied in the way we deliver our thought leadership information.
How do you anticipate ETFs will behave in the next downturn?
The financial crisis of 2008 provided an ideal opportunity to see ETFs in action during times of great market volatility and turmoil. During this time ETFs (while obviously not immune from the
downturn in the market) behaved exactly as one would expect. Put another way, ETFs did their job in reflecting the performance of the market segment they were designed to cover and did
not experience any deviation away from their market value. During this time ETFs also provided benefit to the overall market by providing investors with an accurate view of the true value of
different areas of the economy.