I saw the latest ranking of ETF’s by asset size today, and I was stunned by the results. It was no surprise to see State Street Global Advisors’ SPDR S&P 500 (SPY) on top, with $78 billion in assets, long the 800 pound gorilla of ETF’s. It was the second and third spots that I found the most titillating.
The World Gold Trust Services’ Gold Trust ETF (GLD) came in second, now worth amazing $54 billion, and BlackRock’s (BLK) iShares MSCI Emerging Market Index Fund ETF (EEM) came in third at $45 billion. It seems like only yesterday that these two ETF’s were just little nippers, knee high at best.
The flood of cash out of paper assets into hard ones by investors fleeing global, competitive quantitative easing easily explains GLD’s popularity. And you can’t blame investors departing the US en masse for emerging markets, trading in a projected wheezing, arthritic 2% growth rate at home for sexier, more virile 6%-10% growth rates abroad.
I’m going to make a bold prediction here. GLD and EEM will occupy the top two slots on this list within two years. This will occur both because of price appreciation of the underlying and a continuing inward flood of assets. These ETF’s cater to the major long term trends in the global economy, which are only just getting started, and could continue for the rest of the decade.