US ETF Insights Synthetic Equity & Index Strategy...12 April 2017 US ETF Insights North America...

12 April 2017

US ETF Insights

North AmericaUnited States

Synthetic Equity & Index Strategy

US ETF InsightsDate12 April 2017

Deutsche BankMarkets Research

The 2016 Guide to Institutional ETFOwnershipWelcome to Deutsche Bank's institutional ETF ownership landscape guideOur comprehensive fact-driven analysis of the institutional ETF ownershiplandscape includes over 780,000 ETF positions across all US-domiciled ETFs inthe last 17 years from almost 6,000 firms from over 40 countries. Complementedwith additional insights from hundreds of meetings and interactions withinstitutional ETF users from over 20 countries. Featuring Investment Adviser,Private Bank/WM, Broker, Mutual Fund, Hedge Fund, Pension Fund, InsuranceCompany, and groups of special interest such as institutions in retail distributionchannels (e.g. wirehouses, RIAs, IBDs, RBDs, TAMPs, Robo-Advisors), LatinAmerican pension funds, and international asset managers.

Institutional ETF assets grew by $213bn and reached $1.44 trillion in 2016As of the end of 2016, almost 3,500 institutional investors held more than $1.44trillion in ETF assets accounting for about 59% of all ETF assets. InvestmentAdviser remained as the dominant group with $813bn representing 33% of allETF assets. Meanwhile, Private Bank/Wealth Management followed in a strongsecond place with $372bn in ETF assets or 15% of total assets.

Hedge funds recorded the strongest relative YoY growth in ETF assetsHedge funds saw an increase of 77% in ETF assets to $43.8bn, an increase from1.2% to 1.8% in ETF ownership, and an increase of 17% in the number of fundsusing ETFs. Overall, they continued to prefer a reduced sample of ultra liquidETFs. And had a very sizeable allocation to US Financials at the end of the year.

Insurance companies and mutual funds grow, brokers and pension funds lagInsurance companies and mutual funds seem to be embracing ETFs more andmore and recorded healthy ETF asset growth of 43% and 38%, respectively. Whilebrokers and pension funds saw negative (-4%), and flat (1%) growth, respectively.The decline in brokers reflects the recent capital constraints in banks, while thetepid growth in pensions answers to a rotation of users.

Asset allocation remains top institutional usage for ETFs, but not the only oneInvestment advisers and private banks mostly use ETFs as core asset allocationbuilding blocks in multi asset portfolios. Hedge funds and brokers mostly useETFs for quick access to liquidity, and risk management, and in the case of hedgefunds also for tactical asset allocation. Meanwhile, mutual funds, pension funds,and insurance companies use ETFs for completion strategies, tactical satellitepositions, or cash management.

Sebastian Mercado, CFA

Strategist

+1-212-250-8690

Deutsche Bank Securities Inc.

Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should beaware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should considerthis report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONSARE LOCATED IN APPENDIX 1.MCI (P) 083/04/2017.

Distributed on: 12/04/2017 11:57:14 GMT

0bed7b6cf11c

mailto:[email protected]

12 April 2017

US ETF Insights

Table Of Contents

Introduction ...................................................................... 3

Institutional ETF Ownership Review ................................. 4Summary ........................................................................................................ 4Top institutional users and changes ............................................................... 5Usage preferences by institution type ............................................................ 8Historical evolution ....................................................................................... 13Investor demographics by ETP Issuer .......................................................... 17

Institutional ETF Investor Profiles ................................... 18Investment Adviser ....................................................................................... 18Private Bank/Wealth Management ............................................................... 22Broker ........................................................................................................... 26Mutual Fund ................................................................................................. 30Hedge Fund .................................................................................................. 33Pension Fund ................................................................................................ 37Insurance Company ...................................................................................... 41

Custom Profiles .............................................................. 45Institutions in Retail Distribution Channels .................................................. 45Latam Pension Funds ................................................................................... 49International Asset Managers ....................................................................... 53

Appendix A: Institutional ETF ownership definition ........ 55Institutional investor definitions ................................................................... 55Institutional ownership data definition ......................................................... 56

Appendix B: Other definitions ........................................ 58ETP Universe Definitions .............................................................................. 58Management Style or Product Strategy Definitions ..................................... 58Product Type Definitions .............................................................................. 59


12 April 2017

US ETF Insights

IntroductionWelcome to Deutsche Bank's 2016 institutional ETF ownership landscape guide,our comprehensive fact-driven analysis of the institutional ETF landscape. For thisreport we mostly focus on ETF holdings as reported by institutional investors on13F filings, but we also include some additional sources and custom companyclassifications. More specifically, we processed over 780,000 ETF positions acrossall US-domiciled ETFs in the last 17 years from almost 6,000 firms from over 40countries. Complemented with additional insights from hundreds of meetings andinteractions we have had with institutional ETF users from over 20 countries.

Institutional investors as defined 1 in this report are basically entities that investover $100 million in 13F securities and exercise investment discretion over thoseassets. The key to the definition, however, is the word investment discretion.Investment discretion means full control over the portfolio management process.

Some of the institutions using ETFs are the traditional institutions such as pensionfunds, hedge funds, mutual funds, insurance companies, and endowments.However, the main user base is represented by what we call the new institutions.The new institutions are entities that have been able to evolve from the retailworld to the institutional world by unlocking the power of ETFs (e.g. low cost,scalability, liquidity, and access) in order to create a more leveled playing fieldamong investors. This process of aggregating retail demand into institutional-caliber solutions has allowed the democratization of the investment managementprocess. Many of these new institutions can be found among investment advisers,and private banks/wealth management firms.

The main institutional users featured in this report are: Investment Adviser, PrivateBanking/WM, Broker, Mutual Fund, Pension Fund, Hedge Fund, and InsuranceCompany. And from an ETF user perspective we see investment advisers, andprivate banks/WM as asset allocator investors, brokers and hedge funds asliquidity seekers, and insurance companies, pension funds, and mutual funds asneed-based users.

In the first section of this report we provide a full review of institutional ETFownership across the main institutional investor groups. We discuss their usagepreferences, differences among each other, and historical ownership evolutionthrough multiple lenses.

The second section of our report provides detailed profiles for the main seveninstitutional investor groups featured in this report. Each profile includes a briefdescription of their business model, top users, historical ownership evolution,product preferences, and common utilization of ETFs.

The last section of the report provides custom profiles for groups of specialinterest such as institutions in retail distribution channels (e.g. wirehouses, RIAs,IBDs, etc.), Latin American pension funds, and international asset managers.These profiles use proprietary classifications, estimations, or alternative sourcesto help provide an additional perspective to institutional ETF usage.

1 A more detailed definition of institutional ETF ownership can be found in Appendix A.


12 April 2017

US ETF Insights

Institutional ETFOwnership ReviewSummary

As of the end of 2016, almost 3,500 institutional investors held more than $1.4trillion in ETF assets accounting for about 59% of all ETF assets. ETF assets heldby institutions grew by $213bn or 17% from one year ago, however the relativeETF ownership of institutions slipped by 1.2% relative to last year figure due to aslightly faster growth among retail investors during 2016.

Investment Adviser remained as the dominant group in terms of ETF assetownership with $813bn representing 33% of all ETF assets. Meanwhile, PrivateBank/Wealth Management followed in a strong second place with $372bn in ETFassets or 15% of total assets.

Hedge Funds recorded the strongest relative growth in assets with a 77% from ayear ago. Similarly, Insurance Companies and Mutual Funds also recorded strongrelative asset growth with a 43% and 38% increase from 2015, respectively. Onthe other hand, Pension Funds were practically flat on growth, and Brokers sawthe only decline (-4%) which is consistent with an effort from Banks to free upbalance sheet on the back of recent regulation regarding capital requirements.

Figure 1: Institutional ETF Ownership Summary Q4 '16

$MM %

Institutional Investor (3460)*

Invest. Adviser (2006) 1,482 812,705 674,498 138,208 20% 32.9%

Private Banking (755) 1,255 371,616 335,798 35,818 11% 15.0%

Broker (69) 1,513 83,241 87,065 (3,824) -4% 3.4%

Mutual Fund (163) 647 57,725 41,924 15,801 38% 2.3%

Hedge Fund (352) 764 43,788 24,807 18,981 77% 1.8%

Pension Fund (55) 174 35,302 34,808 493 1% 1.4%

Insurance Company (29) 418 23,591 16,512 7,080 43% 1.0%

Other (31) 473 17,800 16,641 1,160 7% 0.7%

Inst. Investor Total 1,593 1,445,769 1,232,053 213,717 17% 58.5%

Retail Investor

Retail Investor Total 1,661 1,025,138 833,205 191,933 23% 41.5%

Total ETFs 1,708 2,470,907 2,065,258 405,650 20% 100.0%

ETF

Ownership %

Q4 2016

Investor TypeETF AUM $MM YoY Change# of ETFs

Q4 2016

Source: Deutsche Bank, Bloomberg Finance LP, FactSet. *Number of firms in parenthesis.

Figure 2: Historical ETP Institutional Ownership

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Insti

tuti

on

al E

TP

Ow

ners

hip

ETF ETV ETN

Source: Deutsche Bank, Bloomberg Finance LP, FactSet

From a historical ownership perspective, Investment Advisers have steadilygained ETF ownership market share for most of the last 14 years. Private Bank/WM have seen a similar trend of market share gain, but faced a small set back in2016. Meanwhile, Brokers have been yielding market share steadily since 2007which is consistent with our previous findings 2 that ETF assets are mostly heldby investors increasingly using ETFs for asset allocation purposes. Outside thesethree major groups of investors, we highlight the sustained market share gains ofMutual Funds and Insurance Companies, and last year's significant rebound for

2 Sebastian Mercado. "ETFs are owned for Investing, traded for Liquidity" , US ETF Insights. Deutsche BankResearch. Aug 2016.


12 April 2017

US ETF Insights

Hedge Funds; while Pension Funds have recently slowed down in their usage ofETFs relative to the other minor groups.

Figure 3: Historical ETF ownership evolution of main institutional investors

0%

5%

10%

15%

20%

25%

30%

35%

Insti

tuti

on

al E

TF O

wn

ers

hip

Inv. Adviser Private Bank/WM Broker

0%

1%

2%

3%

4%

5%

Insti

tuti

on

al E

TF O

wn

ers

hip

Mutual Fund Hedge Fund

Pension Fund Insurance Company

Other


As per historical growth trends, ETF assets held by institutions and the numberof products used by them have both grown more than 7 and 8 times in the last 10years, respectively. Similarly, the number of different institutional investors usingETFs has almost double during the same period.

Figure 4: Historical Institutional ETF Assets and numberof ETFs held by institutions

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0

200

400

600

800

1,000

1,200

1,400

1,600

# o

f E

TFs u

sed

Inst.

ET

F A

ssets

$B

N

AUM in BN

# ETFs used


Figure 5: Historical number of institutional investors usingETFs

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

# o

f E

TF In

sti

tuti

on

al In

vesto

rs

Other

Insurance Co.

Pension Fund

Hedge Fund

Mutual Fund

Broker

Private Bank/WM

Inv. Adviser


Top institutional users and changes

Top institutional ETF users by assets held mostly belong to the Investment Adviserand Private Banking groups, with some large Brokers making the top 20 also.Overall, institutional ETF assets are highly concentrated with the top 20 ownersaccounting for 40% of the institutional ETF assets, and the top 250 institutionsaccounting for about 80% of those assets.

Concentration of assets, however, can vary significantly from one investor typeto another. For example, the top 20 investment advisers account for about 45%of the group assets, while the top 20 insurance companies account for almostthe entirety of the institutional ETF assets in that investor segment. A differentlook at average ETF assets per institution within each investor type also providesa different perspective in terms of concentration. For instance, leaving Broker


12 April 2017

US ETF Insights

aside, Pension Fund and Insurance Company have the largest ETF allocations perinstitution; while Hedge Fund has the smallest ETF asset allocation per institution.

Figure 6: Top 20 Institutional ETF holders Q4 2016

Institution Name Institution TypeETF Assets

Merrill Lynch, Pierce, Fenner & Smith, Inc. (Invt Investment Adviser 57,580

Morgan Stanley Smith Barney LLC (Private BankPrivate Banking/WM 56,839

Wells Fargo Advisors LLC Private Banking/WM 42,973

UBS Financial Services, Inc. Private Banking/WM 41,821

Bank of America, NA (Private Banking) Private Banking/WM 40,087

JPMorgan Chase Bank, NA (Investment ManagemenInvestment Adviser 38,176

Goldman Sachs & Co. (Private Banking) Private Banking/WM 36,376

Managed Account Advisors LLC Investment Adviser 31,203

Wells Fargo Bank, NA (Private Banking) Private Banking/WM 30,801

BlackRock Fund Advisors Investment Adviser 29,114

Edward D. Jones & Co. LP (Investment ManagemenInvestment Adviser 26,675

Envestnet Asset Management, Inc. Investment Adviser 21,207

Northern Trust Investments, Inc. Investment Adviser 19,557

PNC Bank, NA (Investment Management) Investment Adviser 19,405

Morgan Stanley & Co. LLC Broker 18,080

Strategic Advisers, Inc. Investment Adviser 17,441

Ameriprise Financial Services, Inc. (Private BankPrivate Banking/WM 14,937

Charles Schwab Investment Advisory, Inc. Investment Adviser 13,981

UBS Securities LLC Broker 13,049

JPMorgan Securities LLC Broker 12,200


Figure 7: Top 20 Institutional ETV holders Q4 2016

Institution Name Institution TypeETV Assets

BlackRock Advisors LLC Investment Adviser 1,498

Merrill Lynch, Pierce, Fenner & Smith, Inc. (Invt Investment Adviser 966

UBS Securities LLC Broker 899

BlackRock Investment Management (UK) Ltd. Investment Adviser 879

Morgan Stanley Smith Barney LLC (Private BankPrivate Banking/WM 778

Bank of America, NA (Private Banking) Private Banking/WM 723

Wells Fargo Advisors LLC Private Banking/WM 632

Passport Capital LLC Hedge Fund Manager 552

BlackRock Asset Management Canada Ltd. Fund of Funds Manager 503

UBS Financial Services, Inc. Private Banking/WM 502

First Eagle Investment Management LLC Investment Adviser 499

Paulson & Co., Inc. Hedge Fund Manager 482

Windhaven Investment Management, Inc. Investment Adviser 478

Charles Schwab Investment Advisory, Inc. Investment Adviser 464

Goldman Sachs & Co. (Private Banking) Private Banking/WM 404

Morgan Stanley & Co. LLC Broker 398

Orbis Investment Management Ltd. Hedge Fund Manager 333

Citigroup Global Markets, Inc. (Investment ManagInvestment Adviser 309

Susquehanna Financial Group LLLP Broker 248

International Value Advisers LLC Investment Adviser 222


Figure 8: Institutional ETF asset concentration byInstitution Q4 2016

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 500 1000 1500 2000 2500 3000

% o

f In

sti

tuti

on

al E

TF A

ssets

# of Insitutional Investors


Figure 9: Inst. ETF asset concentration of top 20institution by type, and ETF asset allocation perinstitution Q4 2016

0

200

400

600

800

1,000

1,200

1,400

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inv. Adv. Priv. Bank

Broker Mutual Fund

Hedge Fund

Pension Fund

Insur. Co.

ET

F A

ssets

/ In

sti

tuti

on

$M

M

% o

f In

st.

ET

F A

ssets

of

To

p 2

0 In

st.

Concentration of top 20% Assets / Institution


Major ETF asset year-over-year variationsThe top 25 institution with the largest increases grew their ETF assets by$116bn in 2016; while the 25 institutions with the largest decreases reducedtheir ETF assets by $67bn during the same period. On the growth side, EdwardJones added the most by growing their ETF assets by $11bn or 71% last year;interestingly, most of the growth happened during Q2 after the announcement ofthe Department of Labor (DOL) Fiduciary Rule. Similarly, UBS Financial Services,and Wells Fargo Advisors joined the podium with an additional $7.7bn and $7.4bnover the year, respectively. On the flip side, LPL Financial shrank their ETF assetsthe most with a reduction of $17.3bn (-62%) in 2016. Meanwhile, SusquehannaFinancial Group, and Managed Account Advisors were the next two top reductionof assets with $9.8bn and $5.0bn, respectively.


12 April 2017

US ETF Insights

Figure 10: Top 25 institutions with the largest increase in ETF assets Q4 2016

Institution Name TypeETF assets

$MM

YoY Chg

$MM

YoY Chg

%

Edward D. Jones & Co. LP (Investment Management) Investment Adviser 26,675 11,086 71%

UBS Financial Services, Inc. Private Banking/WM 41,821 7,682 23%

Wells Fargo Advisors LLC Private Banking/WM 42,973 7,389 21%

Ameriprise Financial Services, Inc. (Private Banking) Private Banking/WM 14,937 7,127 91%

Morgan Stanley Smith Barney LLC (Private Banking) Private Banking/WM 56,839 6,923 14%

Envestnet Asset Management, Inc. Investment Adviser 21,207 6,160 41%

Charles Schwab Investment Advisory, Inc. Investment Adviser 13,981 5,944 74%

Bank of America, NA (Private Banking) Private Banking/WM 40,087 5,466 16%

PNC Bank, NA (Investment Management) Investment Adviser 19,405 5,349 38%

Strategic Advisers, Inc. Investment Adviser 17,441 4,221 32%

The Northwestern Mutual Life Insurance Co. (Invt Port) Insurance Company 9,937 4,032 68%

JPMorgan Investment Management, Inc. Mutual Fund Manager 11,116 3,962 55%

Northern Trust Investments, Inc. Investment Adviser 19,557 3,795 24%

Merrill Lynch, Pierce, Fenner & Smith, Inc. (Invt Mgmt) Investment Adviser 57,580 3,686 7%

Passport Capital LLC Hedge Fund Manager 3,598 3,593 73786%

Betterment LLC Investment Adviser 6,761 3,513 108%

Raymond James & Associates, Inc. (Invt Mgmt) Investment Adviser 11,982 3,386 39%

Wells Fargo Bank, NA (Private Banking) Private Banking/WM 30,801 3,153 11%

RBC Capital Markets LLC (Investment Management) Investment Adviser 9,194 3,118 51%

Creative Planning, Inc. Investment Adviser 11,933 3,042 34%

UBS Securities LLC Broker 13,049 2,892 28%

TIAA-CREF Trust Co., FSB Investment Adviser 11,044 2,724 33%

Bridgewater Associates LP Hedge Fund Manager 8,690 2,638 44%

JPMorgan Chase Bank, NA (Investment Management) Investment Adviser 38,176 2,537 7%

QS Investors LLC Investment Adviser 7,015 2,478 55%


Figure 11: Top 25 institutions with the largest decrease in ETF assets Q4 2016

Institution Name TypeETF assets

$MM

YoY Chg

$MM

YoY Chg

%

LPL Financial LLC Private Banking/WM 10,579 (17,317) -62%

Susquehanna Financial Group LLLP Broker 2,368 (9,833) -81%

Managed Account Advisors LLC Investment Adviser 31,203 (5,001) -14%

Morgan Stanley & Co. LLC Broker 18,080 (4,070) -18%

Goldman Sachs & Co. (Private Banking) Private Banking/WM 36,376 (3,968) -10%

Windhaven Investment Management, Inc. Investment Adviser 8,289 (2,533) -23%

Commerzbank AG (Broker) Broker 567 (2,234) -80%

First Trust Advisors LP Investment Adviser 3,627 (2,203) -38%

Citigroup Global Markets, Inc. (Investment Management) Investment Adviser 11,273 (2,051) -15%

HSBC Global Asset Management (UK) Ltd. Investment Adviser 1,799 (2,004) -53%

Kalos Management, Inc. Investment Adviser 57 (1,852) -97%

New Jersey Division of Investment Pension Fund Manager 418 (1,498) -78%

Mizuho Trust & Banking Co., Ltd. (Investment Management) Pension Fund Manager 135 (1,487) -92%

AFP ProVida SA (Investment Management) Pension Fund Manager 2,193 (1,473) -40%

SG Americas Securities LLC Broker 2,218 (1,185) -35%

Credit Suisse Securities (USA) LLC (Broker) Broker 4,412 (1,156) -21%

BNP Paribas Arbitrage SNC Arbitrage 5,402 (1,134) -17%

Aviance Capital Management LLC Investment Adviser 1,448 (905) -38%

Franklin Templeton Investments Corp. Mutual Fund Manager 10 (882) -99%

York Capital Management Global Advisors LLC Hedge Fund Manager - (806) -100%

Pacific Investment Management Co. LLC Investment Adviser 340 (760) -69%

Curian Capital LLC Investment Adviser - (679) -100%

WBI Investments, Inc. Investment Adviser 1,317 (653) -33%

Impulsora de Fondos Banamex SA de CV Investment Adviser 441 (613) -58%

The Public Sector Pension Investment Board Pension Fund Manager 637 (573) -47%



12 April 2017

US ETF Insights

Usage preferences by institution type

Different institutions use ETFs in different ways, and a closer look at theconcentration of their ETF assets per product can provide further insights intotheir usage. In general, we talk about ETF investors or ETF traders wanting touse ETFs for asset allocation, cash management, or risk management. Thus,Investment Adviser and Private Banking tend to meet the ETF investor criteriaand focus mostly on using ETFs as core asset allocation tools; in addition, theyhave a low level of concentration relative to other investor types suggesting thatthey are more likely to use a larger number of ETFs given their preference forfinding the right exposure. Hedge Fund, Insurance Company, Broker, and PensionFund have a high level of concentration as they tend to focus on a few large andvery liquid products. Hedge Fund and Broker are traders and mostly use ETFs asliquidity tools for tactical allocation or risk management, although brokers alsoperform other activities which require them to hold a larger number of ETFs.Pension Fund, and Insurance Company are investors, but they use ETFs in anasset allocation or cash management setting as a tactical satellite instrument,cheap core, or for completion strategies; and given the size of their allocations,they usually prefer large ETFs with sufficient liquidity and TERs on the low end.Mutual funds are somewhere in between in terms of usage; some use ETFs ascore building blocks for multi asset portfolios, while others only use ETFs for cashmanagement purposes.

Figure 12: Concentration of ETF/ETV holdings per institutional investor Q4 '16

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 20 40 60 80 100

Cu

mm

ula

tive E

TP

Asset

Co

ncen

trati

on

Top 100 ETFs/ETVs

Full Universe All Institutions

Invest. Adviser Private Banking

Broker Mutual Fund

Hedge Fund Pension Fund

Insurance Co.


Furthermore, a quick look at the top 30 ETFs and ETVs owned by investortype provides further details into the usage differences. For example, the top 3ETFs owned by insurance companies all track the S&P 500, ultra liquid ETPsabound among hedge funds and brokers, international equity allocations are morerelevant among pension funds, and core building blocks and large ETFs dominateamong investment advisers and private banks.


12 April 2017

US ETF Insights

Figure 13: Top 30 ETF/ETV holdings by institutional investor type

Rank Full Universe All Institutions Invest. Adviser Private Banking Broker Mutual Fund Hedge Fund Pension Fund Insurance Co.

1 SPY ($224.8bn) SPY ($167.0bn) SPY ($65.6bn) SPY ($36.5bn) SPY ($27.7bn) SPY ($12.8bn) SPY ($13.0bn) SPY ($6.0bn) IVV ($4.3bn)

2 IVV ($90.6bn) IVV ($53.1bn) IVV ($30.2bn) IWM ($11.2bn) IWM ($5.1bn) EFA ($2.5bn) EEM ($4.3bn) EEM ($3.0bn) SPY ($3.0bn)

3 VTI ($69.6bn) EFA ($43.9bn) EFA ($29.1bn) IVV ($9.9bn) XLP ($2.2bn) QQQ ($2.1bn) VWO ($3.4bn) VOO ($2.9bn) VOO ($2.3bn)

4 EFA ($59.7bn) IWM ($37.2bn) AGG ($22.7bn) VEA ($9.7bn) GDX ($2.0bn) VOO ($1.7bn) IWM ($1.9bn) IWM ($2.2bn) LQD ($1.8bn)

5 VOO ($56.5bn) AGG ($30.4bn) VEA ($16.5bn) EFA ($8.8bn) XLU ($1.9bn) VWO ($1.7bn) GLD ($1.8bn) IVV ($1.4bn) IJH ($0.7bn)

6 VWO ($43.9bn) VOO ($28.9bn) IWD ($15.9bn) VNQ ($8.2bn) QQQ ($1.9bn) IVV ($1.6bn) XLF ($1.8bn) VNQ ($1.2bn) VEA ($0.6bn)

7 QQQ ($41.8bn) VEA ($28.6bn) BND ($15.6bn) VWO ($7.7bn) XLE ($1.6bn) JNK ($1.1bn) QQQ ($1.1bn) XLF ($1.0bn) VWO ($0.6bn)

8 AGG ($41.6bn) VWO ($27.1bn) IWM ($15.1bn) VTI ($7.2bn) GLD ($1.4bn) VEA ($1.1bn) GDX ($1.0bn) XLY ($0.9bn) BND ($0.6bn)

9 VEA ($40.2bn) IWD ($22.9bn) IJH ($14.4bn) IWF ($6.6bn) FXI ($1.3bn) VTI ($1.0bn) LQD ($0.7bn) DBJP ($0.9bn) IJR ($0.4bn)

10 IWM ($38.7bn) IJH ($22.7bn) VOO ($14.1bn) IJR ($6.6bn) XLF ($1.3bn) IWD ($1.0bn) HYG ($0.7bn) VTV ($0.8bn) EFA ($0.4bn)

11 IWD ($34.9bn) VTI ($21.9bn) VTI ($12.6bn) IJH ($6.5bn) XLV ($1.1bn) TIP ($1.0bn) VOO ($0.6bn) GDX ($0.7bn) AGG ($0.4bn)

12 IJH ($34.7bn) BND ($20.6bn) IWF ($12.6bn) AGG ($6.2bn) HYG ($1.1bn) IWM ($0.9bn) FXI ($0.5bn) IJH ($0.7bn) VNQ ($0.4bn)

13 VNQ ($32.6bn) EEM ($20.0bn) VWO ($12.5bn) VOO ($5.9bn) EFA ($1.0bn) GDX ($0.9bn) EFA ($0.5bn) EWY ($0.6bn) HYG ($0.3bn)

14 IWF ($32.4bn) IWF ($19.8bn) LQD ($11.9bn) IWD ($5.4bn) XLK ($1.0bn) EWJ ($0.8bn) XLV ($0.5bn) VT ($0.6bn) IWB ($0.3bn)

15 BND ($31.4bn) VNQ ($18.2bn) VTV ($11.2bn) QQQ ($4.7bn) VOO ($1.0bn) VNQ ($0.8bn) EWZ ($0.5bn) EWT ($0.6bn) VEU ($0.2bn)

16 GLD ($30.6bn) LQD ($18.2bn) HYG ($9.8bn) MDY ($4.2bn) IYR ($0.9bn) IEMG ($0.7bn) TLT ($0.5bn) QQQ ($0.5bn) QQQ ($0.2bn)

17 VTV ($27.1bn) QQQ ($17.2bn) TIP ($9.6bn) XLF ($3.7bn) EEM ($0.9bn) AGG ($0.7bn) KRE ($0.4bn) EWG ($0.5bn) SCHF ($0.2bn)

18 LQD ($27.0bn) IJR ($16.0bn) VUG ($9.6bn) IWR ($3.6bn) XOP ($0.8bn) BND ($0.6bn) XLI ($0.4bn) EWJ ($0.5bn) IWD ($0.2bn)

19 IJR ($26.5bn) VTV ($15.6bn) IWB ($8.7bn) IEFA ($3.4bn) GDXJ ($0.8bn) HYG ($0.6bn) BSV ($0.4bn) IEMG ($0.5bn) EEM ($0.2bn)

20 EEM ($26.0bn) HYG ($15.1bn) IEMG ($8.6bn) IVW ($3.4bn) EWZ ($0.7bn) IEFA ($0.6bn) XLY ($0.4bn) VTI ($0.4bn) BSV ($0.2bn)

21 VUG ($23.0bn) XLF ($14.9bn) IJR ($8.5bn) BND ($3.2bn) XLI ($0.7bn) BKLN ($0.6bn) DXJ ($0.3bn) VWO ($0.4bn) VYM ($0.2bn)

22 XLF ($22.5bn) IEMG ($13.9bn) IEFA ($8.0bn) IEMG ($3.2bn) IBB ($0.6bn) LQD ($0.6bn) XLE ($0.3bn) XLV ($0.4bn) XLV ($0.2bn)

23 VIG ($22.4bn) VUG ($13.2bn) BSV ($7.5bn) VUG ($3.1bn) BKLN ($0.6bn) XLK ($0.6bn) IBB ($0.3bn) EWZ ($0.4bn) VGT ($0.1bn)

24 TIP ($21.3bn) TIP ($12.9bn) EEM ($7.4bn) VCSH ($3.0bn) JNK ($0.5bn) XLE ($0.4bn) GDXJ ($0.3bn) EFA ($0.3bn) MUB ($0.1bn)

25 BSV ($19.6bn) GLD ($12.2bn) VNQ ($7.3bn) XLK ($3.0bn) VTI ($0.5bn) BSV ($0.4bn) XOP ($0.3bn) XLK ($0.3bn) IXC ($0.1bn)

26 HYG ($18.9bn) IEFA ($12.1bn) QQQ ($6.4bn) VTV ($3.0bn) DIA ($0.5bn) XLF ($0.4bn) MDY ($0.3bn) HYG ($0.3bn) CSJ ($0.1bn)

27 MDY ($18.8bn) IWB ($11.9bn) XLF ($6.4bn) VB ($3.0bn) VEA ($0.4bn) BNDX ($0.4bn) IEMG ($0.3bn) SHE ($0.3bn) PFF ($0.1bn)

28 IEMG ($17.8bn) BSV ($11.3bn) GLD ($6.2bn) VIG ($2.9bn) EWJ ($0.4bn) IWS ($0.4bn) XLP ($0.3bn) XLU ($0.3bn) TLT ($0.1bn)

29 VYM ($17.6bn) MDY ($10.8bn) IWR ($5.8bn) VO ($2.9bn) MDY ($0.4bn) BNDS ($0.4bn) EWJ ($0.3bn) GLD ($0.2bn) EWC ($0.1bn)

30 XLE ($17.6bn) XLE ($10.8bn) CSJ ($5.7bn) DBEF ($2.9bn) TLT ($0.4bn) XLI ($0.4bn) XLU ($0.3bn) VXUS ($0.2bn) CIU ($0.1bn)


Asset class and equity marketsAll investor types allocate over 80% to equity ETFs, with the exception ofinvestment advisers which allocate about 75%, and have the largest allocationto fixed income ETFs. Private banks, mutual funds, and insurance companiesalso have a significant allocation to fixed income ETFs. Pension funds allocatemore than 95% to equity ETFs, while hedge funds allocate the most (3-5%) tocommodity (mostly Gold) ETVs.

In terms of equity markets allocations, all investors assign the majority of theirequity ETF assets to the US, but allocations range from the low 60% for pensionfunds to about 80% in the case of brokers. Conversely, pension funds have themost significant non-US allocation, while hedge funds have the largest allocationto emerging markets; such distribution of assets highlights the importance thesetwo groups of investors assign to ETFs as access products.


12 April 2017

US ETF Insights

Figure 14: Institutional Investor ETF/ETV allocation byAsset Class – Q4 2016

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inv.

Adviser

Priv.

Bank

Broker Mutual

Fund

Hedge

Fund

Pension

Fund

Insurance

Co.

Inst.

ET

P A

ssets

Mark

et

Sh

are

Equity Fixed Income Commodity Other Asset Class


Figure 15: Institutional Investor ETF allocation by Marketfocus – Q4 2016 (Equity)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inv.

Adviser

Priv.

Bank

Broker Mutual

Fund

Hedge

Fund

Pension

Fund

Insurance

Co.

Inst.

ET

F A

ssets

Mark

et

Sh

are

US DM EM Global


US equity sectorsUS Sector equity investing can be measured by the allocations made to sector-diversified vs. sector-specific ETFs. Thus we find that mutual funds have thelargest allocation to sector-specific ETFs (~40%), and therefore are the most likelyto employ sector ETFs. Meanwhile, insurance companies prefer mostly diversifiedsector exposure as suggested by the low allocation to sector funds (~10%). Withinsector products, investors also have different preferences. For example, as of theend of last year hedge funds preferred Financials, insurance companies preferredReal Estate, brokers had a more even distribution with a larger allocation to Energyrelative to the other groups of investors, and pension funds had a larger weightassigned to Consumer Discretionary relative to other institutions.

Figure 16: Institutional Investor ETF allocation by US Sector – Q4 2016 (US Equity)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inv.

Adviser

Priv.

Bank

Broker Mutual

Fund

Hedge

Fund

Pension

Fund

Insurance

Co.

Inst.

ET

F A

ssets

Mark

et

Sh

are

US Sector Diversified US Sectors

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inv.

Adv.

Priv.

Bank

Broker Mutual

Fund

Hedge

Fund

Pen.

Fund

Insur.

Co.

Inst.

ET

F A

ssets

Mark

et

Sh

are

Telecom

Materials

Utilities

Cons. Staples

Cons. Disc.

Industrials

Healthcare

Energy

Technology

Financials

Real Estate


US equity size and styleInstitutions have a clear preference for Large Cap ETFs, however those investorsusing these funds as core building blocks for asset allocation are also morelikely to use Broad, Mid Cap, and Small Cap products such as in the case ofinvestment advisers and private banks. Furthermore, those institutions using ETFsfor liquidity, or efficient market access such as brokers, hedge funds, and pensionfunds are less likely to use Mid Cap vehicles.

Style investing seems popular almost exclusively within the asset allocator groupsas suggested by the 20%-plus allocations of investment advisers and privatebanks. Mutual Funds also have some relevant allocation (~15%) to style ETFs,


12 April 2017

US ETF Insights

however the usage in this case would be more likely as a cash management toolgiven that many mutual funds follow growth, value, or income-oriented strategies.Meanwhile, ETF style investing is almost inexistent among brokers, hedge funds,and pension funds.

Figure 17: Institutional Investor ETF allocation by US Size & Style – Q4 2016 (US Equity)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inv.

Adviser

Priv.

Bank

Broker Mutual

Fund

Hedge

Fund

Pension

Fund

Insurance

Co.

Inst.

ET

F A

ssets

Mark

et

Sh

are

Broad Large Cap Mid Cap Small Cap

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inv.

Adviser

Priv.

Bank

Broker Mutual

Fund

Hedge

Fund

Pension

Fund

Insurance

Co.

Inst.

ET

F A

ssets

Mark

et

Sh

are

Blend Value Growth Dividend


Fixed income sectors and expense ratiosIn terms of fixed income sector ETF allocations we highlight insurance companieswhich had almost 60% invested in Corporates at the end of last year, and hedgefunds with the largest allocation to US Treasuries (>20%).

From a cost perspective, the bulk of the assets (60-70%) of institutional investorsis concentrated in products that charge less than 20bps, and in the case ofinsurance companies this amount even reaches over 80% of the ETP assets.Hedge funds and pension funds seem less sensitive to prices relative to otherinvestors, but this is probably because of their higher allocation to internationalmarkets, particularly emerging markets.

Figure 18: Institutional Investor ETF allocation by FixedIncome Sector – Q4 2016

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inv.

Adv.

Priv.

Bank

Broker Mutual

Fund

Hedge

Fund

Pen.

Fund

Insur.

Co.

Inst.

ET

F A

ssets

Mark

et

Sh

are

Convertible

International

Senior Loans

Preferred

Securitized

EM debt

Municipal

Inflation

US Treasury

Aggregate

Corporates


Figure 19: Institutional Investor ETF/ETV allocation byTER– Q4 2016

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inv.

Adviser

Priv.

Bank

Broker Mutual

Fund

Hedge

Fund

Pension

Fund

Insurance

Co.

Inst.

ET

P A

ssets

Mark

et

Sh

are

<0.2% 0.2%-0.4% 0.4%-0.6% 0.6%-0.8% >0.8%


Equity index providers and ETF/ETV issuersWhen it comes to equity index providers we highlight the large allocations (>60%)to S&P Dow Jones of brokers and insurance companies, while pension funds havethe largest allocation (~30%) to MSCI.


12 April 2017

US ETF Insights

With regards to ETP issuers, liquidity seekers such as brokers and hedge fundsprefer State Street GA; meanwhile investment advisers, private banks, pensionfunds, and insurance companies prefer BlackRock allocating between 40% to50% in their products.

Figure 20: Institutional Investor ETF allocation by IndexProvider – Q4 2016 (Equity)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inv.

Adviser

Priv.

Bank

Broker Mutual

Fund

Hedge

Fund

Pension

Fund

Insurance

Co.

Inst.

ET

F A

ssets

Mark

et

Sh

are

S&P Dow Jones FTSE Russell MSCI CRSP Nasdaq OMX Other Providers


Figure 21: Institutional Investor ETF/ETV allocation byIssuer – Q4 2016

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inv.

Adv.

Priv.

Bank

Broker Mutual

Fund

Hedge

Fund

Pen.

Fund

Insur.

Co.

Inst.

ET

P A

ssets

Mark

et

Sh

are

Other Issuers

Goldman Sachs

ProShares

ALPS

PIMCO

Deutsche AM

FlexShares

Guggenheim

VanEck Vectors

WisdomTree

First Trust

Charles Schwab

PowerShares

Vanguard

State Street

BlackRock


Product type and management style3

At the end of 2016, brokers, and hedge funds owned mostly Pseudo Futures (PF)ETFs (~70%), while pension funds also allocated a significant portion of their ETFassets (50%) to them. Insurance companies allocated about 60% of their assets toCash Management (CM) ETFs, while Investment advisers and private banks had amore balanced allocation among Asset Allocation (AA), Cash Management, andPseudo Futures ETFs. Finally, with the exception of the negligible allocation ofbrokers, Leverage and Inverse ETFs registered practically non-existent allocationsamong institutional investors.

From a management style perspective among equity ETFs, most institutionsallocated around 90% to Beta products, while investment advisers and privatebanks allocated about 70% to Beta products and 30% to Smart Beta products.

Figure 22: Institutional Investor ETP allocation by ProductType – Q4 2016

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inv.

Adviser

Priv.

Bank

Broker Mutual

Fund

Hedge

Fund

Pension

Fund

Insurance

Co.

Inst.

ET

P A

ssets

Mark

et

Sh

are

AA CM PF LevInv


Figure 23: Institutional Investor ETF allocation byManagement Style – Q4 2016 (Equity)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inv.

Adviser

Priv.

Bank

Broker Mutual

Fund

Hedge

Fund

Pension

Fund

Insurance

Co.

Inst.

ET

F A

ssets

Mark

et

Sh

are

Beta Smart Beta Active


3 Refer to Appendix B for a definition of product types, and management styles.


12 April 2017

US ETF Insights

Historical evolution

Asset class and equity marketsInstitutional ownership (IO) in Equity and Fixed Income ETFs has been on anuptrend for most part of the last decade. However we saw a small set backduring 2016. Furthermore, Fixed Income ETFs have registered the highest (>60%)institutional ownership in recent years, overtaking Equity ETFs with institutionalownership levels just below 60%.

Institutional ownership within equity ETFs across markets has been steadily onthe rise over most of the last 15 years. Emerging Markets have the highest IO at65%, followed by Intl Developed Markets (61%), the US (57%), and Global (50%)ETFs.

Figure 24: Historical Inst. ETP Ownership by Asset Class

0%

10%

20%

30%

40%

50%

60%

70%

Insti

tuti

on

al E

TP

Ow

ners

hip

Equity Fixed Income

Commodity Other Asset Class


Figure 25: Historical Inst. ETF Ownership by Market(Equity)

0%

10%

20%

30%

40%

50%

60%

70%

80%

Insti

tuti

on

al E

TF O

wn

ers

hip

US DM EM Global


US equity sectorsAccording to IO levels we can identify two groups as of the end of 2016.The first group with IO levels in the range of 54%-60% included Real Estate,Financials, Technology, Energy, Healthcare, and Telecom. The second groupincluded Industrials, Consumer Staples, Consumer Discretionary, Utilities, andMaterials with IO levels in the range of 69%-74%.

Figure 26: Historical Inst. ETF Ownership by US Sector (Equity)

0%

10%

20%

30%

40%

50%

60%

70%

80%

Insti

tuti

on

al E

TF O

wn

ers

hip

Real Estate Financials Technology

Energy Healthcare Telecom

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Insti

tuti

on

al E

TF O

wn

ers

hip

Industrials Cons. Disc. Cons. Staples

Utilities Materials



12 April 2017

US ETF Insights

US equity size and styleInstitutional ETF ownership within size segments has been dominated by SmallCap ETFs which recorded an IO level of 64% at the end of last year, followedby Large Caps with 62%, and Mid Cap with 58%. In the meantime, farther inthe distance there were Broad ETFs with an IO of 46% suggesting a higher retailappetite in this segment.

Within Style ETFs, institutional ETF ownership for Growth and Value wereconverging with Blend at about 58% towards the end of last year; while DividendETFs with an IO of 36% clearly signaled retail preference.

Figure 27: Historical Inst. ETF Ownership by US Size and US Style (Equity)

0%

10%

20%

30%

40%

50%

60%

70%

80%

Insti

tuti

on

al E

TF O

wn

ers

hip


0%

10%

20%

30%

40%

50%

60%

70%

Insti

tuti

on

al E

TF O

wn

ers

hip



Fixed income sectorsMost Fixed Income sector ETFs exhibit an institutional bias from an ownershipperspective with most of them registering ownership levels between 55% and75%. The only exception was Preferred, which only had an IO level of 35%,suggesting these ETFs tend to be mostly a retail product.

Figure 28: Historical Inst. ETF Ownership by Sector (Fixed Income)

0%

10%

20%

30%

40%

50%

60%

70%

80%

Insti

tuti

on

al E

TF O

wn

ers

hip

Corporates Aggregate US Treasury

Inflation Municipal

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Insti

tuti

on

al E

TF O

wn

ers

hip

EM debt

Securitized

Preferred

Senior Loans

International

Convertible


Commodity, Alternatives, and expense ratiosDiversified Broad commodity ETPs had an IO level of 60% at the end of 2016,while Volatility, and Precious Metals products were just over 50%, and below 40%owned by institutions, respectively.


12 April 2017

US ETF Insights

From a cost perspective, lower cost buckets tend to have a higher institutionalownership. The bucket including ETPs under 20bps has an IO level of about 60%,while the next two buckets (20-40bps and 40-60bps) have IO levels of 58% and53%, respectively. In addition, the most expensive bucket (>80bps) with an IOlevel of 31% tends to be mostly dominated by retail investors. On the other hand,the bucket of 60-80bps has the highest institutional ownership at 61%, but thisis also the bucket that includes most of the Emerging Market vehicles which arealso the ones with the highest IO levels.

Figure 29: Historical Inst. ETP* Ownership by selectComdty and Alt sectors

0%

10%

20%

30%

40%

50%

60%

70%

Insti

tuti

on

al E

TP

Ow

ners

hip

Precious Metals

Diversified Broad Cmdty

Volatility

Source: Deutsche Bank, Bloomberg Finance LP, FactSet. *Volatility includes ETNs.

Figure 30: Historical Inst. ETP Ownership by TER

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Insti

tuti

on

al E

TP

Ow

ners

hip

<0.2% 0.2%-0.4% 0.4%-0.6% 0.6%-0.8% >0.8%


Equity index providers and ETF/ETV issuersEquity ETFs tracking indices from S&P Dow Jones, FTSE Russell, and MSCI havehigh institutional ownership levels just above 60%, while ETFs tracking indicesfrom Nasdaq OMX and CRSP have a larger retail component.

Institutional ownership levels can vary significantly from one issuer to another.For example, among the top 5 issuers by ETP assets, 67% of the assets invested inState Street GA ETPs were in the hands of institutional investors at the end of lastyear; while only 43% of the assets in Charles Schwab ETFs were in institutionalhands. However, we still highlight the growth in institutional ownership in CharlesSchwab ETFs from 20% back in 2013.

Figure 31: Historical Inst. ETF Ownership by IndexProvider (Equity)

0%

10%

20%

30%

40%

50%

60%

70%

80%

Insti

tuti

on

al E

TF O

wn

ers

hip

S&P Dow Jones FTSE Russell

MSCI CRSP

Nasdaq OMX


Figure 32: Historical Inst. ETP Ownership by Issuer (Top 5)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Insti

tuti

on

al E

TP

Ow

ners

hip

BlackRock State Street

Vanguard PowerShares

Charles Schwab



12 April 2017

US ETF Insights

Product type and management styleFrom a product type perspective, Pseudo Futures ETFs have historically registeredthe largest institutional ownership levels. In fact, as of the end of last year PF ETFsrecorded an IO level of 69%, followed somewhat in the distance by CM (56%) andAA (54%) ETFs. Meanwhile, Leverage and Inverse ETFs with an IO level closer to10% remained primarily a retail vehicle compared to other products.

Historical institutional ETF ownership trends also suggest that institutions havepreferred Beta products over Smart Beta products, although institutional interestas measured by IO levels has risen for both historically.

Figure 33: Historical Inst. ETP Ownership by Product Type

0%

10%

20%

30%

40%

50%

60%

70%

80%

Insti

tuti

on

al E

TP

Ow

ners

hip

AA CM PF LevInv


Figure 34: Historical Inst. ETF Ownership by ManagementStyle (Equity)

0%

10%

20%

30%

40%

50%

60%

70%

Insti

tuti

on

al E

TF O

wn

ers

hip




12 April 2017

US ETF Insights

Investor demographics by ETP Issuer

On one hand, understanding the mix of investors per ETP issuer can providefurther insights into ETP usage, and liquidity. While, on the other hand, theinvestor demographics can also help understand the ETP issuer distributionchannels, and product scalability and liquidity potential.

In our experience, retail investors, investment advisers, and private banks tendto behave more like investors, that is they focus on the right exposure, tend touse a broader range of products, and usually employ ETPs as core or satelliteasset allocation building blocks. Brokers and hedge funds, on the other hand, areliquidity seekers and behave like traders, focusing on the most liquid productsand holding ETPs for shorter periods of time. Pension funds, mutual funds, andinsurance companies are more selective investors, focusing on ETPs of larger sizeand abundant liquidity which they use for asset allocation or cash management.

At the end of 2016, almost all of the top 15 ETP issuers by institutional assets hadat least 90% in the hands of asset allocators such as retail, investment advisers,and private banks. The three exceptions were State Street and VanEck Vectorswhich had a high component of brokers and hedge funds, and Deutsche AMwhich had a large pension fund allocation. In addition, Flexshares had a very highinstitutional ownership, but most of it was in the hands of investment adviserswhich ultimately corresponded primarily to FlexShares' affiliate Northern TrustInvestments. Charles Schwab ETFs also exhibited a distinctive feature in theirdemographics, where almost the entirety of the assets were in the hands of assetallocators, which is not surprising considering that the majority of their ETF assetscome from accounts using Schwab custody.

Figure 35: Investor market share of ETP assets by Issuer

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

BlackRock State Street

Vanguard PowerShares

Charles Schwab First Trust

WisdomTree VanEck Vectors

Guggenheim FlexShares

Deutsche AM PIMCO

ALPS ProShares

Goldman Sachs

ETP asset market share by Investor Type

Retail Inv. Adv. Priv. Bank Broker Mutual Fund Hedge Fund Pen. Fund Insur. Co. Other



12 April 2017

US ETF Insights

Institutional ETF InvestorProfilesInvestment Adviser

Investment advisers are a broad group, thus it is no surprise they are the groupwith the largest number of institutions using ETFs, and the largest ETF assetownership. First and foremost, investment advisers are investors, and thereforetend to have longer time horizons. They provide custom or off-the-shelf solutionsto meet client objectives, which in many cases take the form of multi assetdiversified portfolios of different risk profiles. Their clients can be both retailor institutional. The delivery of these solutions can take the form of mutualfunds, separately managed accounts (SMA), or collective investment trusts (CIT).Although investment advisers come in every size, from large asset managers andwirehouses with hundreds of billions of dollars under management down to asmall Registered Investment Adviser (RIA) with just over one hundred milliondollars, the majority does not enjoy the accessibility to markets and financialinstruments of larger traditional institutions (e.g. pension funds, endowments,etc). Therefore ETFs provide a great path to scalability and institutionalization,which ultimately results in a more leveled field among advisers.

Investment advisers mostly use ETFs as core investment, the top holdings includevery cheap products which usually track plain-vanilla Beta equity and bondindices tracking major model portfolio building blocks. The presence of manyVanguard and iShares Core ETFs supports this observation. Investment adviserstend to run simple asset allocation model portfolios which tend to be veryscalable, and don’t experience significant turnover, therefore clean asset classexposure and cost tend to be key on the selection of products. Liquidity is animportant factor, but not a deciding one; for example, for broad emerging marketsexposure the cheaper options (VWO and IEMG) are both preferred over the mostliquid one (EEM).

Investment advisers are more likely to use ETFs as the main implementationvehicle in their portfolios, rather than just as an auxiliary tool employed to fulfillother secondary objectives. For this reason, they are also more likely to allocate alarger part of their assets to ETFs which makes them a very relevant institutionalETF investor group despite the lower absolute dollar allocations per adviser.Furthermore, because they usually focus on finding the best exposure to representtheir investment views they are more likely to use a larger number of ETFs acrossmultiple asset classes, product types, and management styles. For example,investment advisers exhibit some of the largest allocation to fixed income ETFsamong institutions, while also having significant allocations to multiple equitymarkets, US sectors, styles, sizes, and smart beta strategies.


12 April 2017

US ETF Insights

Figure 36: Top 20 Inv. Adviser by ETF Assets

Institution NameETF Assets $M

Merrill Lynch, Pierce, Fenner & Smith, Inc. (Invt Mgmt) 57,580

JPMorgan Chase Bank, NA (Investment Management) 38,176

Managed Account Advisors LLC 31,203

BlackRock Fund Advisors 29,114

Edward D. Jones & Co. LP (Investment Management) 26,675

Envestnet Asset Management, Inc. 21,207

Northern Trust Investments, Inc. 19,557

PNC Bank, NA (Investment Management) 19,405

Strategic Advisers, Inc. 17,441

Charles Schwab Investment Advisory, Inc. 13,981

Raymond James & Associates, Inc. (Invt Mgmt) 11,982

Creative Planning, Inc. 11,933

Citigroup Global Markets, Inc. (Investment Management) 11,273

TIAA-CREF Trust Co., FSB 11,044

Milliman Financial Risk Management LLC 9,859

RBC Capital Markets LLC (Investment Management) 9,194

BlackRock Financial Management, Inc. 8,308

Windhaven Investment Management, Inc. 8,289

Edelman Financial Services LLC 7,945

US Bancorp Asset Management, Inc. 7,469


Figure 37: Historical ETF Assets and # of ETFs used - Inv.Adviser

0

200

400

600

800

1000

1200

1400

1600

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

# o

f E

TFs u

sed

Inst.

ET

F A

ssets

$M

M

ETF Assets # ETFs used


Figure 38: Top 30 ETPs owned by Inv. Adviser

Rank TickerStruc-

ture

Product

TypeAsset Class Sector Market Issuer TER

ETF Assets

held $MM

ETF total

AUM $MM

%

Owned

1 SPY ETF PF Equity Overall US State Street 0.09% 65,572 224,820 29%

2 IVV ETF CM Equity Overall US BlackRock 0.04% 30,158 90,620 33%

3 EFA ETF CM Equity Overall DM BlackRock 0.33% 29,143 59,665 49%

4 AGG ETF CM Fixed Income Broad US BlackRock 0.05% 22,667 41,555 55%

5 VEA ETF CM Equity Overall DM Vanguard 0.09% 16,537 40,169 41%

6 IWD ETF PF Equity Overall US BlackRock 0.20% 15,938 34,879 46%

7 BND ETF CM Fixed Income Broad US Vanguard 0.06% 15,622 31,443 50%

8 IWM ETF PF Equity Overall US BlackRock 0.20% 15,075 38,727 39%

9 IJH ETF CM Equity Overall US BlackRock 0.07% 14,405 34,715 41%

10 VOO ETF CM Equity Overall US Vanguard 0.05% 14,077 56,485 25%

11 VTI ETF CM Equity Overall US Vanguard 0.05% 12,614 69,556 18%

12 IWF ETF PF Equity Overall US BlackRock 0.20% 12,582 32,389 39%

13 VWO ETF CM Equity Overall EM Vanguard 0.14% 12,472 43,948 28%

14 LQD ETF CM Fixed Income Corporates US BlackRock 0.15% 11,894 27,041 44%

15 VTV ETF CM Equity Overall US Vanguard 0.08% 11,235 27,101 41%

16 HYG ETF PF Fixed Income Corporates US BlackRock 0.50% 9,764 18,891 52%

17 TIP ETF CM Fixed Income Inflation US BlackRock 0.20% 9,640 21,348 45%

18 VUG ETF CM Equity Overall US Vanguard 0.08% 9,604 23,010 42%

19 IWB ETF AA Equity Overall US BlackRock 0.15% 8,674 16,883 51%

20 IEMG ETF AA Equity Overall EM BlackRock 0.14% 8,622 17,807 48%

21 IJR ETF CM Equity Overall US BlackRock 0.07% 8,504 26,462 32%

22 IEFA ETF AA Equity Overall DM BlackRock 0.08% 7,959 15,774 50%

23 BSV ETF CM Fixed Income Broad US Vanguard 0.09% 7,468 19,575 38%

24 EEM ETF PF Equity Overall EM BlackRock 0.69% 7,392 26,034 28%

25 VNQ ETF CM Equity Real Estate US Vanguard 0.12% 7,302 32,603 22%

26 QQQ ETF PF Equity Overall US PowerShares 0.20% 6,386 41,793 15%

27 XLF ETF PF Equity Financials US State Street 0.14% 6,353 22,477 28%

28 GLD ETV PF Commodity Precious Metals State Street 0.40% 6,243 30,629 20%

29 IWR ETF AA Equity Overall US BlackRock 0.20% 5,784 14,213 41%

30 CSJ ETF CM Fixed Income Corporates US BlackRock 0.20% 5,737 11,111 52%



12 April 2017

US ETF Insights

Figure 39: Historical allocation of ETP assets by assetclass - Inv. Adviser

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are



Figure 40: Historical allocation of ETF assets by Market(Equity) - Inv. Adviser

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

US DM EM Global


Figure 41: Historical allocation of ETF assets by US Sectors (Equity) - Inv. Adviser

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

F A

ssets

Mark

et

Sh

are

Telecom

Materials

Utilities

Cons. Staples

Cons. Disc.

Industrials

Healthcare

Energy

Technology

Financials

Real Estate


Figure 42: Historical allocation of ETF assets by US Size and US Style (Equity) - Inv. Adviser

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are




12 April 2017

US ETF Insights

Figure 43: Historical allocation of ETF assets by Sector(Fixed Income) - Inv. Adviser

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Convertible

International

Senior Loans

Preferred

Securitized

EM debt

Municipal

Inflation

US Treasury

Aggregate

Corporates


Figure 44: Historical allocation of ETP assets by TER - Inv.Adviser

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

<0.2% 0.2%-0.4% 0.4%-0.6% 0.6%-0.8% >0.8%


Figure 45: Historical allocation of ETF assets by IndexProvider (Equity) - Inv. Adviser

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Other Providers

Nasdaq OMX

CRSP

MSCI

FTSE Russell

S&P Dow

Jones


Figure 46: Historical allocation of ETP assets by Issuer -Inv. Adviser

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

P A

ssets

Mark

et

Sh

are

Other Issuers

Goldman Sachs

ProShares

ALPS

PIMCO

Deutsche AM

FlexShares

Guggenheim Inv.

VanEck Vectors

WisdomTree

First Trust

Charles Schwab

PowerShares

Vanguard

State Street

BlackRock

ers


Figure 47: Historical allocation of ETP assets by ProductType - Inv. Adviser

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

AA CM PF LevInv


Figure 48: Historical allocation of ETF assets byManagement Style (Equity) - Inv. Adviser

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are




12 April 2017

US ETF Insights

Private Bank/Wealth Management

Private Banks or Wealth Management institutions are also investors, andtherefore tend to have longer time horizons. In many ways they are very similarto investment advisers, and they can also serve retail and institutional clients.However, the difference would be that private banks/WM tend to focus on highnet worth retail clients, and usually would offer financial and investment advicein conjunction with other wealth related services such as accounting and taxservices, retirement planning, and legal and estate planning. In addition, due tothe nature of their clients, custom solutions tailored to the client's overall financialneeds are more common than in the case of investment advisers. Neverthelessoff-the-shelf solutions are also available. These solutions are most likely availablevia SMAs, but could also be available in other forms such as mutual funds. ForPrivate Banks, ETFs offer a myriad of flavors to meet the different requirements oftheir clients, making the task of creating diversified custom portfolios much moremanageable - particularly when investment advice is not the only focus.

Private banks, like investment advisers, also use ETFs mostly as core investments;however, given the more tailored nature of their business model, management ofETF model portfolios may be less concentrated and therefore less scalable. Onthe other hand, the need to meet specific client requirements opens the door to alarger variety of asset classes. This is observed clearly by the presence of multipleVanguard and iShares Core products, the presence of Real Estate, Dividend,Growth/Value, Currency Hedged, and sector-tilt (QQQ) ETFs among the top 30ETPs owned by them as a group. Portfolio turnover is probably slightly higher thaninvestment advisers, but still relatively low. Clean asset class exposure and costcontinue to be key on the selection of products. And while large products withsufficient liquidity are still preferred, liquidity is not a deciding factor.

Because private banks are more likely to use ETFs for asset allocation as a primaryobjective, and due to the unique requirements of their clients, private banksare more likely to be open to explore non-traditional strategies (e.g. smart beta,value-based, or theme investing). While, at the same time, the relatively lowerconcentration of assets of the business model yields smaller dollar allocations.


12 April 2017

US ETF Insights

Figure 49: Top 20 Private Bank/WM by ETF Assets


Morgan Stanley Smith Barney LLC (Private Banking) 56,839

Wells Fargo Advisors LLC 42,973

UBS Financial Services, Inc. 41,821

Bank of America, NA (Private Banking) 40,087

Goldman Sachs & Co. (Private Banking) 36,376

Wells Fargo Bank, NA (Private Banking) 30,801

Ameriprise Financial Services, Inc. (Private Banking) 14,937

LPL Financial LLC 10,579

First Republic Investment Management, Inc. 3,712

Nomura Securities Co., Ltd. (Private Banking) 3,602

SunTrust Banks, Inc. (Wealth Management) 3,564

Veritable LP 2,786

Robert W. Baird & Co., Inc. (Private Wealth Management) 2,559

SCS Capital Management LLC 1,980

Pinnacle Advisory Group, Inc. 1,295

Ballentine Partners LLC 1,183

Brinker Capital, Inc. 1,054

Aspiriant LLC 991

William Blair & Co. LLC (Investment Management) 898

Sullivan, Bruyette, Speros & Blayney LLC 879


Figure 50: Historical ETF Assets and # of ETFs used - Priv.Bank/WM

0

200

400

600

800

1000

1200

1400

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

# o

f E

TFs u

sed

Inst.

ET

F A

ssets

$M

M



Figure 51: Top 30 ETPs owned by Priv. Bank/WM

Rank TickerStruc-

ture

Product


ETF Assets

held $MM

ETF total

AUM $MM

%

Owned









9 IWF ETF PF Equity Overall US BlackRock 0.20% 6,639 32,389 20%

10 IJR ETF CM Equity Overall US BlackRock 0.07% 6,575 26,462 25%

11 IJH ETF CM Equity Overall US BlackRock 0.07% 6,485 34,715 19%

12 AGG ETF CM Fixed Income Broad US BlackRock 0.05% 6,153 41,555 15%




16 MDY ETF PF Equity Overall US State Street 0.25% 4,244 18,798 23%


18 IWR ETF AA Equity Overall US BlackRock 0.20% 3,600 14,213 25%

19 IEFA ETF AA Equity Overall DM BlackRock 0.08% 3,398 15,774 22%

20 IVW ETF CM Equity Overall US BlackRock 0.18% 3,376 14,835 23%

21 BND ETF CM Fixed Income Broad US Vanguard 0.06% 3,242 31,443 10%

22 IEMG ETF AA Equity Overall EM BlackRock 0.14% 3,182 17,807 18%

23 VUG ETF CM Equity Overall US Vanguard 0.08% 3,082 23,010 13%

24 VCSH ETF CM Fixed Income Corporates US Vanguard 0.07% 3,023 15,775 19%

25 XLK ETF PF Equity Technology US State Street 0.14% 2,987 14,119 21%

26 VTV ETF CM Equity Overall US Vanguard 0.08% 2,985 27,101 11%

27 VB ETF AA Equity Overall US Vanguard 0.08% 2,973 16,195 18%

28 VIG ETF CM Equity Overall US Vanguard 0.09% 2,881 22,364 13%

29 VO ETF AA Equity Overall US Vanguard 0.08% 2,878 16,521 17%

30 DBEF ETF AA Equity Overall DM Deutsche AM 0.35% 2,861 7,802 37%



12 April 2017

US ETF Insights

Figure 52: Historical allocation of ETP assets by assetclass - Priv. Bank/WM

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are



Figure 53: Historical allocation of ETF assets by Market(Equity) - Priv. Bank/WM

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

US DM EM Global


Figure 54: Historical allocation of ETF assets by US Sectors (Equity) - Priv. Bank/WM

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

F A

ssets

Mark

et

Sh

are

Telecom

Materials

Utilities

Cons. Staples

Cons. Disc.

Industrials

Healthcare

Energy

Technology

Financials

Real Estate


Figure 55: Historical allocation of ETF assets by US Size and US Style (Equity) - Priv. Bank/WM

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are




12 April 2017

US ETF Insights

Figure 56: Historical allocation of ETF assets by Sector(Fixed Income) - Priv. Bank/WM

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Convertible

International

Senior Loans

Preferred

Securitized

EM debt

Municipal

Inflation

US Treasury

Aggregate

Corporates


Figure 57: Historical allocation of ETP assets by TER -Priv. Bank/WM

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

<0.2% 0.2%-0.4% 0.4%-0.6% 0.6%-0.8% >0.8%


Figure 58: Historical allocation of ETF assets by IndexProvider (Equity) - Priv. Bank/WM

Inst.

ET

P A

s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Other Providers

Nasdaq OMX

CRSP

MSCI

FTSE Russell

S&P Dow

Jones


Figure 59: History allocation of ETP assets by Issuer -Priv. Bank/WM

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

P A

ssets

Mark

et

Sh

are

Other Issuers

Goldman Sachs

ProShares

ALPS

PIMCO

Deutsche AM

FlexShares

Guggenheim Inv.

VanEck Vectors

WisdomTree

First Trust

Charles Schwab

PowerShares

Vanguard

State Street

BlackRock

ders


Figure 60: Historical allocation of ETP assets by ProductType - Priv. Bank/WM

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

AA CM PF LevInv


Figure 61: Historical allocation of ETF assets byManagement Style (Equity) - Priv. Bank/WM

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are




12 April 2017

US ETF Insights

Broker

Brokers are traders by definition and usually have a very short time horizon orholding period (e.g. from seconds to days). They don't usually take directionalviews or risk in most of their trades, but rather hedge their positions in order tolock in the bid/ask spread and mitigate the risk of adverse market moves. Theirmain objective is to provide liquidity to buyers and sellers by either matchingthem (i.e. agency trades), or by using their own capital to take the opposite sideof the trade (i.e. principal trades). Brokers are continually in the search of newliquidity tools and efficient hedging tools that can facilitate their market makingactivities. Some ETFs can provide massive amounts of liquidity, and can also bevery efficient hedging vehicles, and as expected they have become some of thefavorite tools among brokers. Furthermore brokers also fulfill key roles within theETF ecosystem such as Authorized Participant (AP), arbitrageurs, Lead MarketMakers (LMM), seeder, and security lenders.

■ Authorized Participant: AP is a broker that has entered into a contractualagreement with the ETF sponsor to create and redeem ETF shares in fixed-number sets (e.g 50,000) called creation units. An AP can engage in bothin-kind (i.e. securities) and cash creation/redemption activity.

■ Arbitrageur: because ETFs have both a price and a net asset value (NAV),the market interactions in the ETF and the securities underlying the ETFcan make the price deviate from the NAV at times. Brokers may monitorsuch deviations in an attempt to arbitrage any pricing inefficienciescontributing to keeping the price of an ETF in line with its NAV.

■ Lead Market Maker: the majority of ETFs have an LMM which is supposedto function as the liquidity source of last resort. LMMs have clearly definedquoting obligations that must be met on an ongoing basis.

■ Seeder: every ETF is launched with a minium level of assets usuallyequivalent to two creation units (commonly 100,000 shares or about $2million). ETF sponsors usually work with one or multiple brokers to fundthese initial capital commitments.

■ Security Lender: if ETF shares cannot be located, brokers may use theirbalance sheet to create ETF shares to lend out to clients that desire toborrow the ETF.

Although brokers use ETFs for market making (lead, inventory and hedging),security lending, and seeding, many of these activities have become more limitedrecently due to the new capital requirements and more restricted use of banks’balance sheet. This has been noted in the decreasing level of ETF assets heldamong brokers in the last couple of years. Nevertheless, the list of top 30 productsheld by brokers continues to be dominated by ETFs that are characterized forbeing not only the most liquid in the industry, but also in the whole market suchas SPY, IWM, QQQ, and others we classify as Pseudo Futures ETFs which are veryefficient risk management tools. Moreover, most of these ETFs tend to have themost competitive shorting metrics for their respective asset class or benchmark,and liquid options. Thus, cost is not as relevant for brokers as it is liquidity both onthe long and short side. Finally, because there is no portfolio as such, thereforeturnover is probably the highest among institutional investors.


12 April 2017

US ETF Insights

Figure 62: Top 20 Broker by ETF Assets


Morgan Stanley & Co. LLC 18,080

UBS Securities LLC 13,049

JPMorgan Securities LLC 12,200

Citigroup Global Markets, Inc. (Broker) 5,019

Barclays Capital, Inc. 4,779

Credit Suisse Securities (USA) LLC (Broker) 4,412

Jane Street Capital LLC 4,302

Susquehanna Financial Group LLLP 2,368

SG Americas Securities LLC 2,218

Mizuho Securities USA, Inc. 1,758

CIBC World Markets Corp. 1,455

Flow Traders US LLC 1,441

D. A. Davidson & Co. 1,375

RBC Dominion Securities, Inc. 1,315

Old Mission Capital LLC 943

Goldman Sachs International 883

Wells Fargo Securities LLC 800

KCG Americas LLC 752

Wolverine Trading LLC 723

Cutler Group LP 580


Figure 63: Historical ETF Assets and # of ETFs used -Broker

0

200

400

600

800

1000

1200

1400

1600

-

20,000

40,000

60,000

80,000

100,000

120,000

# o

f E

TFs u

sed

Inst.

ET

F A

ssets

$M

M



Figure 64: Top 30 ETPs owned by Broker

Rank TickerStruc-

ture

Product


ETF Assets

held $MM

ETF total

AUM $MM

%

Owned



3 XLP ETF PF Equity Consumer Staples US State Street 0.14% 2,171 8,294 26%

4 GDX ETF PF Equity Theme Global VanEck Vectors 0.52% 1,961 9,685 20%

5 XLU ETF PF Equity Utilities US State Street 0.14% 1,921 6,994 27%


7 XLE ETF PF Equity Energy US State Street 0.14% 1,584 17,585 9%


9 FXI ETF PF Equity Overall EM BlackRock 0.73% 1,333 2,902 46%


11 XLV ETF PF Equity Healthcare US State Street 0.14% 1,085 13,500 8%

12 HYG ETF PF Fixed Income Corporates US BlackRock 0.50% 1,058 18,891 6%


14 XLK ETF PF Equity Technology US State Street 0.14% 959 14,119 7%

15 VOO ETF CM Equity Overall US Vanguard 0.05% 954 56,485 2%

16 IYR ETF PF Equity Real Estate US BlackRock 0.43% 920 4,236 22%

17 EEM ETF PF Equity Overall EM BlackRock 0.69% 917 26,034 4%

18 XOP ETF PF Equity Energy US State Street 0.35% 815 2,370 34%

19 GDXJ ETF PF Equity Theme Global VanEck Vectors 0.54% 775 3,454 22%

20 EWZ ETF PF Equity Overall EM BlackRock 0.62% 744 4,255 17%

21 XLI ETF PF Equity Industrials US State Street 0.14% 652 10,172 6%

22 IBB ETF PF Equity Healthcare US BlackRock 0.47% 629 7,620 8%

23 BKLN ETF CM Fixed Income Senior Loans US PowerShares 0.65% 602 7,906 8%

24 JNK ETF CM Fixed Income Corporates US State Street 0.40% 539 11,986 4%

25 VTI ETF CM Equity Overall US Vanguard 0.05% 489 69,556 1%

26 DIA ETF PF Equity Overall US State Street 0.17% 479 14,702 3%

27 VEA ETF CM Equity Overall DM Vanguard 0.09% 443 40,169 1%

28 EWJ ETF CM Equity Overall DM BlackRock 0.48% 442 15,300 3%

29 MDY ETF PF Equity Overall US State Street 0.25% 435 18,798 2%

30 TLT ETF PF Fixed Income US Treasury US BlackRock 0.15% 425 5,150 8%



12 April 2017

US ETF Insights

Figure 65: Historical allocation of ETP assets by assetclass - Broker

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are



Figure 66: Historical allocation of ETF assets by Market(Equity) - Broker

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

US DM EM Global


Figure 67: Historical allocation of ETF assets by US Sectors (Equity) - Broker

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

F A

ssets

Mark

et

Sh

are

Telecom

Materials

Utilities

Cons. Staples

Cons. Disc.

Industrials

Healthcare

Energy

Technology

Financials

Real Estate


Figure 68: Historical allocation of ETF assets by US Size and US Style (Equity) - Broker

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are




12 April 2017

US ETF Insights

Figure 69: Historical allocation of ETF assets by Sector(Fixed Income) - Broker

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Convertible

International

Senior Loans

Preferred

Securitized

EM debt

Municipal

Inflation

US Treasury

Aggregate

Corporates


Figure 70: Historical allocation of ETP assets by TER -Broker

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

<0.2% 0.2%-0.4% 0.4%-0.6% 0.6%-0.8% >0.8%


Figure 71: Historical allocation of ETF assets by IndexProvider (Equity) - Broker

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Other Providers

Nasdaq OMX

CRSP

MSCI

FTSE Russell

S&P Dow

Jones


Figure 72: Historical allocation of ETP assets by Issuer -Broker

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

P A

ssets

Mark

et

Sh

are

Other Issuers

Goldman Sachs

ProShares

ALPS

PIMCO

Deutsche AM

FlexShares

Guggenheim Inv.

VanEck Vectors

WisdomTree

First Trust

Charles Schwab

PowerShares

Vanguard

State Street

BlackRock

ers


Figure 73: Historical allocation of ETP assets by ProductType - Broker

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

AA CM PF LevInv


Figure 74: Historical allocation of ETF assets byManagement Style (Equity) - Broker

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are




12 April 2017

US ETF Insights

Mutual Fund

Mutual funds are off-the-shelf investment solutions offered to meet commonclient objectives. They are mostly used by retail investors, but also used byinstitutions - particularly in the retirement market. Mutual funds are investors andusually have mid to long term time horizons. They can focus on a single or multipleasset classes. For a time they had remained skeptic of ETFs, but they have beenwarming up to them in recent years. In fact, ETF assets held by mutual funds morethan tripled in the last 5 years. In addition, we see that more and more mutualfunds are adopting ETFs, whether it is as an auxiliary tool in single asset classportfolios or main building block in multi asset portfolios.

ETF usage among mutual funds is fairly mixed. We believe that the most commonusages of ETFs by mutual funds, in order of popularity, are: cash equitization,liquidity management, and core investment. Our top 30 product sample includescommonly-used active manager benchmarks such as the S&P 500, MSCI EAFE,Russell 2000, NASDAQ-100, etc.; as well as less liquid asset classes such as HighYield Credit, and Senior Loans. Apparently a criteria combination of underlyingindex exposure, liquidity, and cost seems more relevant than just one of them ontheir own.

Furthermore, a look at the top mutual fund managers suggest that those withtheir own ETF product suites are more likely to use ETFs as core building blocksin multi asset portfolios (e.g. State Street GA, Vanguard); while other mutualfund managers are more likely to use ETFs for cash management and liquiditypurposes. Therefore, unless part of a fund of funds portfolio, in general ETFs don’tplay a structural role in the mutual fund manager portfolio and therefore theirusage tends to be more tactical with relatively high turnover of ETF positions.

Figure 75: Top 20 Mutual Fund by ETF Assets


JPMorgan Investment Management, Inc. 11,116

SSgA Funds Management, Inc. 8,535

The Vanguard Group, Inc. 5,352

Wilmington Trust Investment Advisors, Inc. 3,012

AllianceBernstein LP 2,656

Columbia Management Investment Advisers LLC 2,140

Psagot Mutual Funds Ltd. 2,083

Handelsbanken Fonder AB 1,878

BMO Asset Management, Inc. 1,602

American Century Investment Management, Inc. 1,556

Rafferty Asset Management LLC 1,554

Wellington Management Co. LLP 1,443

Thrivent Investment Management, Inc. 1,179

Catalyst Capital Advisors LLC 1,024

Voya Investment Management Co. LLC 916

FIL Investment Advisors (UK) Ltd 885

Franklin Advisers, Inc. 871

AGF Investments, Inc. 774

Industrial Alliance Investment Management, Inc. 609

Invesco Canada Ltd. 599


Figure 76: Historical ETF Assets and # of ETFs used -Mutual Fund

0

100

200

300

400

500

600

700

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

# o

f E

TFs u

sed

Inst.

ET

F A

ssets

$M

M




12 April 2017

US ETF Insights

Figure 77: Top 30 ETPs owned by Mutual Fund

Rank TickerStruc-

ture

Product


ETF Assets

held $MM

ETF total

AUM $MM

%

Owned







7 JNK ETF CM Fixed Income Corporates US State Street 0.40% 1,125 11,986 9%




11 TIP ETF CM Fixed Income Inflation US BlackRock 0.20% 966 21,348 5%

12 IWM ETF PF Equity Overall US BlackRock 0.20% 917 38,727 2%

13 GDX ETF PF Equity Theme Global VanEck Vectors 0.52% 886 9,685 9%


15 VNQ ETF CM Equity Real Estate US Vanguard 0.12% 780 32,603 2%

16 IEMG ETF AA Equity Overall EM BlackRock 0.14% 736 17,807 4%

17 AGG ETF CM Fixed Income Broad US BlackRock 0.05% 659 41,555 2%

18 BND ETF CM Fixed Income Broad US Vanguard 0.06% 611 31,443 2%

19 HYG ETF PF Fixed Income Corporates US BlackRock 0.50% 595 18,891 3%

20 IEFA ETF AA Equity Overall DM BlackRock 0.08% 561 15,774 4%

21 BKLN ETF CM Fixed Income Senior Loans US PowerShares 0.65% 556 7,906 7%

22 LQD ETF CM Fixed Income Corporates US BlackRock 0.15% 556 27,041 2%


24 XLE ETF PF Equity Energy US State Street 0.14% 448 17,585 3%

25 BSV ETF CM Fixed Income Broad US Vanguard 0.09% 431 19,575 2%

26 XLF ETF PF Equity Financials US State Street 0.14% 430 22,477 2%

27 BNDX ETF AA Fixed Income Broad Global Vanguard 0.12% 397 6,069 7%

28 IWS ETF AA Equity Overall US BlackRock 0.25% 392 9,110 4%

29 BNDS ETF AA Fixed Income Broad US State Street 0.09% 376 1,219 31%



Figure 78: Historical allocation of ETP assets by assetclass - Mutual Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are



Figure 79: Historical allocation of ETF assets by Market(Equity)- Mutual Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

US DM EM Global



12 April 2017

US ETF Insights

Figure 80: Historical allocation of ETF assets by US Sectors (Equity) - Mutual Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

F A

ssets

Mark

et

Sh

are

Telecom

Materials

Utilities

Cons. Staples

Cons. Disc.

Industrials

Healthcare

Energy

Technology

Financials

Real Estate


Figure 81: Historical allocation of ETF assets by US Size and US Style (Equity) - Mutual Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are



Figure 82: Historical allocation of ETF assets by Sector(Fixed Income) - Mutual Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Convertible

International

Senior Loans

Preferred

Securitized

EM debt

Municipal

Inflation

US Treasury

Aggregate

Corporates


Figure 83: Historical allocation of ETP assets by TER -Mutual Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

<0.2% 0.2%-0.4% 0.4%-0.6% 0.6%-0.8% >0.8%



12 April 2017

US ETF Insights

Figure 84: Historical allocation of ETF assets by IndexProvider (Equity) - Mutual Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Other Providers

Nasdaq OMX

CRSP

MSCI

FTSE Russell

S&P Dow

Jones


Figure 85: Historical allocation of ETP assets by Issuer -Mutual Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

P A

ssets

Mark

et

Sh

are

Other Issuers

Goldman Sachs

ProShares

ALPS

PIMCO

Deutsche AM

FlexShares

Guggenheim Inv.

VanEck Vectors

WisdomTree

First Trust

Charles Schwab

PowerShares

Vanguard

State Street

BlackRock

ers


Figure 86: Historical allocation of ETP assets by ProductType - Mutual Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

AA CM PF LevInv


Figure 87: Historical allocation of ETF assets byManagement Style (Equity) - Mutual Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are



Hedge Fund

Hedge funds are traders that seek to implement directional or relative valueviews around market inefficiencies and events (e.g. macroeconomic, geopolitical,or company specific). They usually seek absolute returns, take long and shortpositions, and may deal in less liquid securities, or in large concentrated sizes.Recent ETF ownership data suggest that more and more hedge funds are findingvalue in using ETFs.

In fact, our data suggest that hedge funds use ETFs for gaining quick and efficientasset class access both on the long and short side, similar to futures contracts. Inaddition, some can hold ETFs for very long periods (>1 year), while many othersmay hold them for less than 1 day. Nevertheless, the main requirement is enoughliquidity (on the long and short side) and size to be able to execute large tradeswithout major market impact, particularly on those asset classes that may beharder to access. Cost is usually not the main criteria for product selection. Finally,the presence of highly liquid products among the top 30 covering diverse assetclasses such as equities, fixed income, and commodities supports these views.Particularly, high positions in Gold, Gold miners, High Yield Credit, EM countries,sectors and industries further confirm the efficient access product thesis.


12 April 2017

US ETF Insights

Figure 88: Top 20 Hedge Fund by ETF Assets


Bridgewater Associates LP 8,690

Passport Capital LLC 3,598

Citadel Advisors LLC 2,411

Magnetar Financial LLC 2,089

IndexIQ Advisors LLC 1,677

Parallax Volatility Advisers LP 1,214

Two Sigma Advisers LP 1,077

Lumina Fund Management LLC 821

Investure LLC 794

Slate Path Capital LP 764

Quantitative Investment Management LLC 728

Millennium Management LLC 723

Glen Point Capital LLP 689

JBF Capital, Inc. 685

Millburn Ridgefield Corp. 683

Discovery Capital Management LLC 662

D. E. Shaw & Co. LP 640

MSD Partners LP 569

Main Management LLC 567

Gladius Capital Management LP 533


Figure 89: Historical ETF assets and # of ETFs used -Hedge Fund

0

100

200

300

400

500

600

700

800

900

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

# o

f E

TFs u

sed

Inst.

ET

F A

ssets

$M

M



Figure 90: Top 30 ETPs owned by Hedge Fund

Rank TickerStruc-

ture

Product


ETF Assets

held $MM

ETF total

AUM $MM

%

Owned








8 GDX ETF PF Equity Theme Global VanEck Vectors 0.52% 1,029 9,685 11%

9 LQD ETF CM Fixed Income Corporates US BlackRock 0.15% 672 27,041 2%


11 VOO ETF CM Equity Overall US Vanguard 0.05% 605 56,485 1%

12 FXI ETF PF Equity Overall EM BlackRock 0.73% 532 2,902 18%

13 EFA ETF CM Equity Overall DM BlackRock 0.33% 514 59,665 1%

14 XLV ETF PF Equity Healthcare US State Street 0.14% 489 13,500 4%



17 KRE ETF PF Equity Financials US State Street 0.35% 430 3,557 12%



20 XLY ETF PF Equity Consumer Discretion US State Street 0.14% 372 10,817 3%

21 DXJ ETF AA Equity Overall DM WisdomTree 0.48% 350 8,000 4%

22 XLE ETF PF Equity Energy US State Street 0.14% 312 17,585 2%

23 IBB ETF PF Equity Healthcare US BlackRock 0.47% 312 7,620 4%

24 GDXJ ETF PF Equity Theme Global VanEck Vectors 0.54% 302 3,454 9%

25 XOP ETF PF Equity Energy US State Street 0.35% 291 2,370 12%

26 MDY ETF PF Equity Overall US State Street 0.25% 290 18,798 2%


28 XLP ETF PF Equity Consumer Staples US State Street 0.14% 280 8,294 3%


30 XLU ETF PF Equity Utilities US State Street 0.14% 256 6,994 4%



12 April 2017

US ETF Insights

Figure 91: Historical allocation of ETP assets by assetclass - Hedge Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are



Figure 92: Historical allocation of ETF assets by Market(Equity) - Hedge Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

US DM EM Global


Figure 93: Historical allocation of ETF assets by US Sectors (Equity) - Hedge Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

F A

ssets

Mark

et

Sh

are

Telecom

Materials

Utilities

Cons. Staples

Cons. Disc.

Industrials

Healthcare

Energy

Technology

Financials

Real Estate


Figure 94: Historical allocation of ETF assets by US Size and US Style (Equity) - Hedge Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are




12 April 2017

US ETF Insights

Figure 95: Historical allocation of ETF assets by Sector(Fixed Income) - Hedge Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Convertible

International

Senior Loans

Preferred

Securitized

EM debt

Municipal

Inflation

US Treasury

Aggregate

Corporates


Figure 96: Historical allocation of ETP assets by TER -Hedge Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

<0.2% 0.2%-0.4% 0.4%-0.6% 0.6%-0.8% >0.8%


Figure 97: Historical allocation of ETF assets by IndexProvider (Equity) - Hedge Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Other Providers

Nasdaq OMX

CRSP

MSCI

FTSE Russell

S&P Dow

Jones


Figure 98: Historical allocation of ETP assets by Issuer -Hedge Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

P A

ssets

Mark

et

Sh

are

Other Issuers

Goldman Sachs

ProShares

ALPS

PIMCO

Deutsche AM

FlexShares

Guggenheim Inv.

VanEck Vectors

WisdomTree

First Trust

Charles Schwab

PowerShares

Vanguard

State Street

BlackRock

ers


Figure 99: Historical allocation of ETP assets by ProductType - Hedge Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

AA CM PF LevInv


Figure 100: Historical allocation of ETF assets byManagement Style (Equity) - Hedge Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are




12 April 2017

US ETF Insights

Pension Fund

Pension funds are traditional institutional investors that manage retirementassets. Pension funds can be part of public or private systems, butnotwithstanding they are usually highly regulated. They have one of the longestinvestment time horizons, and high asset concentration; therefore they tendto have well defined strategic asset allocation budgets. Nevertheless they mayengage in tactical asset allocation as well. Furthermore, they have some of thelongest and toughest due diligence processes for external managers, but onceallocations are approved they tend to come in large sizes. In addition, they tend tobe really cost-conscious investors, have very broad mandates arising from theirneed to be diversified, and are usually somewhat short-staffed for the task athand. Therefore many pension funds have found a friendly new addition to theirtoolkit in ETFs.

For pension funds ETFs are usually seen as a way to obtain access to differentasset classes in an efficient way. However, unlike hedge funds, ETFs tend to play amore strategic role in pension portfolios. The better way to describe Pension Fundusage of ETFs is completion. Usually pension funds use ETFs as building blocksfor more efficient financial markets, or markets that are difficult to access. Forexample, it is common to see non-US based pension funds use ETFs for accessingthe US market (either via broad or sector exposures), and countries outside theirown region (e.g. Latin American pension using Asian country ETFs), or US-basedpension funds using ETFs for accessing Emerging Markets, specific factors, orcustom exposures. Although pension funds have focused mostly on using equityETFs, we have recently seen some pick up in the usage of Fixed Income ETFs suchas High Yield credit. Given the more strategic nature of ETFs in pension portfolios,turnover tends to be somewhere in between Investment Adviser and Mutual Fund.A combination of factors including exposure, liquidity, size, cost, and to someextent specific index and ETF issuer support, is usually more important than anysingle selection criterion on its own.

Smaller pension funds are more likely to use ETFs as a core investment buildingblock compared to larger pension funds which may have better access to markets,financial instruments, or in-house indexing capabilities. Moreover, pension fundshaven't seemed as committed to ETFs as other investors such as investmentadvisers or private banks; for them ETFs are just another useful tool in their toolkit.Thus it is not uncommon to see a specific pension fund ETF assets fluctuatearound changes in key portfolio management personnel, or changes in tacticalasset allocation. Pension funds from Latin America, the US, Finland, and Israelwere among the main users as of the end of last year.


12 April 2017

US ETF Insights

Figure 101: Historical ETF Assets and # of ETFs used - Pension Fund

0

20

40

60

80

100

120

140

160

180

200

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

# o

f E

TFs u

sed

Inst.

ET

F A

ssets

$M

M

Other

Japan

Sweden

New Zealand

South Korea

Canada

US Private

Israel

Finland

US Public

Latam

# ETFs used


Figure 102: List of Pension Funds by country and ETF assets

2016 2015 $MM %

Ontario Teachers' Pension Plan Board Canada 1,446 880 566 64%

The Caisse de depot et placement du Quebec Canada 893 530 363 69%

The Public Sector Pension Investment Board Canada 637 1,211 (573) -47%

Canada Pension Plan Investment Board Canada 209 18 191 1075%

OMERS Administration Corp. Canada 107 41 65 158%

Keskinainen tyoelakevakuutusyhtio Varma Finland 3,043 2,685 358 13%

Keskinainen Elakevakuutusyhtio Ilmarinen Finland 1,488 1,387 100 7%

Keskinainen Tyoelakevakuutusyhtio Elo Finland 991 924 67 7%

Valtion Elakerahasto - The State Pension Fund Finland 314 266 48 18%

Keskinainen Elakevakuutusyhtio Etera Finland 100 79 21 26%

Clal Gemel Ltd. Israel 4,232 2,279 1,953 86%

Amitim Senior Pension Funds Israel 1,168 1,071 97 9%

Mizuho Trust & Banking Co., Ltd. (Investment Management) Japan 135 1,622 (1,487) -92%

Prima AFP SA (Investment Management) Latam 3,011 2,644 367 14%

AFP Integra SA (Investment Management) Latam 2,618 2,558 60 2%

AFP ProVida SA (Investment Management) Latam 2,193 3,666 (1,473) -40%

Gareth Morgan Investments LP New Zealand 453 109 344 315%

Futuro SGFP SA Portugal 0 - 0

National Pension Service of Korea South Korea 749 646 103 16%

Tredje AP-fonden Sweden 120 285 (165) -58%

AMF Pensionsforsakring AB Sweden 43 178 (135) -76%

USS Investment Management Ltd. United Kingdom 93 96 (3) -3%

Pension Services Ltd. United Kingdom 6 5 0 8%

Lockheed Martin Investment Management Co. US Private 1,045 946 99 10%

The Dow Chemical Co. Pension Fund US Private 795 815 (20) -2%

DuPont Capital Management Corp. US Private 704 329 375 114%

Coordinating Investment Fiduciary of Raytheon Master Pension US Private 383 517 (134) -26%

IBM Retirement Fund US Private 272 95 177 186%

United States Steel & Carnegie Pension Fund US Private 244 198 46 23%

Deere & Co. (Pension Fund & Investments) US Private 95 171 (77) -45%

Honeywell Capital Management LLC US Private 77 51 27 53%

ExxonMobil Investment Management, Inc. US Private 8 27 (19) -72%

CenturyLink Investment Management Co. US Private 0 - 0

Tennessee Consolidated Retirement System US Public 2,528 1,814 715 39%

The Retirement Systems of Alabama US Public 810 710 100 14%

Pennsylvania Public School Employees Retirement System US Public 694 389 304 78%

State of Wisconsin Investment Board US Public 681 527 154 29%

Employees Retirement System of Texas US Public 672 657 15 2%

Michigan Department of Treasury (Investment Management) US Public 473 613 (141) -23%

New Jersey Division of Investment US Public 418 1,917 (1,498) -78%

State Board of Administration of Florida Retirement System US Public 288 2 286 12027%

New York State Common Retirement Fund US Public 270 225 45 20%

California State Teachers' Retirement System US Public 263 - 263

State Teachers Retirement System of Ohio US Public 216 432 (216) -50%

South Dakota Investment Council US Public 131 130 1 1%

Pension Reserves Investment Management Board US Public 63 64 (1) -1%

Teacher Retirement System of Texas US Public 59 41 18 43%

Ohio Public Employees Retirement System US Public 44 24 20 82%

Louisiana State Employees' Retirement System US Public 44 63 (19) -30%

The Oregon Investment Council US Public 33 33 0 1%

Texas Permanent School Fund US Public 31 58 (27) -47%

Virginia Retirement Systems US Public 24 2 23 1327%

The California Public Employees Retirement System US Public 21 20 1 6%

Illinois State Board of Investment US Public 16 7 8 115%

Teachers Retirement System of the State of Kentucky US Public 0 0 0 9%

Institution NameCountry /

System

ETF Assets $MM YoY Chg



12 April 2017

US ETF Insights

Figure 103: Top 30 ETPs owned by Pension Fund

Rank TickerStruc-

ture

Product


ETF Assets

held $MM

ETF total

AUM $MM

%

Owned








8 XLY ETF PF Equity Consumer Discretion US State Street 0.14% 930 10,817 9%

9 DBJP ETF AA Equity Overall DM Deutsche AM 0.50% 914 2,082 44%

10 VTV ETF CM Equity Overall US Vanguard 0.08% 755 27,101 3%

11 GDX ETF PF Equity Theme Global VanEck Vectors 0.52% 734 9,685 8%

12 IJH ETF CM Equity Overall US BlackRock 0.07% 655 34,715 2%

13 EWY ETF CM Equity Overall EM BlackRock 0.62% 629 2,848 22%

14 VT ETF AA Equity Overall DM Vanguard 0.11% 587 6,444 9%

15 EWT ETF PF Equity Overall EM BlackRock 0.62% 586 2,734 21%

16 QQQ ETF PF Equity Overall US PowerShares 0.20% 539 41,793 1%

17 EWG ETF CM Equity Overall DM BlackRock 0.48% 529 3,936 13%



20 VTI ETF CM Equity Overall US Vanguard 0.05% 443 69,556 1%

21 VWO ETF CM Equity Overall EM Vanguard 0.14% 405 43,948 1%






27 SHE ETF AA Equity Theme US State Street 0.20% 263 271 97%

28 XLU ETF PF Equity Utilities US State Street 0.14% 251 6,994 4%

29 GLD ETV PF Commodity Precious Metals State Street 0.40% 232 30,629 1%

30 VXUS ETF AA Equity Overall Global Vanguard 0.11% 214 6,407 3%


Figure 104: Historical allocation of ETP assets by assetclass - Pension Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are



Figure 105: Historical allocation of ETF assets by Market(Equity ) - Pension Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

US DM EM Global



12 April 2017

US ETF Insights

Figure 106: Historical allocation of ETF assets by US Sectors (Equity) - Pension Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

F A

ssets

Mark

et

Sh

are

Telecom

Materials

Utilities

Cons. Staples

Cons. Disc.

Industrials

Healthcare

Energy

Technology

Financials

Real Estate


Figure 107: Historical allocation of ETF assets by US Size and US Style (Equity) - Pension Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are



Figure 108: Historical allocation of ETF assets by Sector(Fixed Income) - Pension Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Convertible

International

Senior Loans

Preferred

Securitized

EM debt

Municipal

Inflation

US Treasury

Aggregate

Corporates


Figure 109: Historical allocation of ETP assets by TER -Pension Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

<0.2% 0.2%-0.4% 0.4%-0.6% 0.6%-0.8% >0.8%



12 April 2017

US ETF Insights

Figure 110: Historical allocation of ETF assets by IndexProvider (Equity) - Pension Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Other Providers

Nasdaq OMX

CRSP

MSCI

FTSE Russell

S&P Dow

Jones


Figure 111: Historical allocation of ETP assets by Issuer -Pension Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

P A

ssets

Mark

et

Sh

are

Other Issuers

Goldman Sachs

ProShares

ALPS

PIMCO

Deutsche AM

FlexShares

Guggenheim Inv.

VanEck Vectors

WisdomTree

First Trust

Charles Schwab

PowerShares

Vanguard

State Street

BlackRock

ers


Figure 112: Historical allocation of ETP assets by ProductType - Pension Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

AA CM PF LevInv


Figure 113: Historical allocation of ETF assets byManagement Style (Equity) - Pension Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are



Insurance Company

Insurance companies, whether life, property & casualty, health, or other type,collect and invest premiums in order to meet claims and make a profit. Becauseof the nature of their business model, insurance companies usually employ anAsset Liability Management (ALM) approach to asset management, and thereforetheir portfolios tend to be heavily invested in fixed income (e.g. 75%) securities. Inaddition, the insurance industry is highly regulated and investable vehicles usuallyneed to get approved by the regulator before insurers can invest in them. This,combined with the fact that about 80% of ETF assets were invested in equityvehicles as of the end of last year have resulted in ETFs not been as popularamong insurance companies as they have been among other institutional investortypes. However, this is changing and ETFs have begun to become more popularamong insurers, and are actively being used for cash equitization, liquidity, andcore investment building blocks. Furthermore, ETFs benchmarked to the S&P 500index, and Corporate IG Credit were among their most popular allocations at theend of 2016. Meanwhile, exposure, size, cost, and liquidity combined tend to bethe main selection criteria. Turnover of ETF positions is probably similar to thatof Mutual Fund Managers.


12 April 2017

US ETF Insights

Figure 114: Top 20 Insurance Co. by ETF Assets


The Northwestern Mutual Life Insurance Co. (Invt Port) 9,937

National Mutual Insurance Fed. of Agricultural Cooperatives 4,192

Migdal Insurance Co. Ltd. 2,079

Factory Mutual Insurance Co. (Investment Portfolio) 964

Schweizerische Ruckversicherungs-Gesellschaft AG (Invt P 925

Sentry Investment Management LLC 817

Metropolitan Life Insurance Co. (Investment Portfolio) 716

Mandatum Henkivakuutusosakeyhtio Oy 481

The Empire Life Insurance Co. (Investment Portfolio) 424

Symetra Life Insurance Co. (Investment Portfolio) 415

The Dai-ichi Life Insurance Co., Ltd. (Investment Portfolio) 378

The Guardian Life Insurance Co. of America (Invt Portfolio) 322

Fukoku Mutual Life Insurance Co. (Investment Portfolio) 318

XL Group Investments LLC 260

Zurich Life Assurance Plc 260

Liberty Mutual Insurance Co. (Investment Portfolio) 236

Axis Capital Holdings Ltd. (Investment Portfolio) 182

Kemper Corp. (Investment Portfolio) 174

Torchmark Corp. (Investment Portfolio) 135

Prudential Gibraltar Financial Life Insurance Co., Ltd. (IP) 121


Figure 115: Historical ETF Assets and # of ETFs used -Insurance Co.

0

50

100

150

200

250

300

350

400

450

-

5,000

10,000

15,000

20,000

25,000

# o

f E

TFs u

sed

Inst.

ET

F A

ssets

$M

M



Figure 116: Top 30 ETPs owned by Insurance Company

Rank TickerStruc-

ture

Product


ETF Assets

held $MM

ETF total

AUM $MM

%

Owned




4 LQD ETF CM Fixed Income Corporates US BlackRock 0.15% 1,807 27,041 7%

5 IJH ETF CM Equity Overall US BlackRock 0.07% 692 34,715 2%

6 VEA ETF CM Equity Overall DM Vanguard 0.09% 618 40,169 2%

7 VWO ETF CM Equity Overall EM Vanguard 0.14% 590 43,948 1%

8 BND ETF CM Fixed Income Broad US Vanguard 0.06% 566 31,443 2%

9 IJR ETF CM Equity Overall US BlackRock 0.07% 419 26,462 2%


11 AGG ETF CM Fixed Income Broad US BlackRock 0.05% 393 41,555 1%

12 VNQ ETF CM Equity Real Estate US Vanguard 0.12% 376 32,603 1%


14 IWB ETF AA Equity Overall US BlackRock 0.15% 273 16,883 2%

15 VEU ETF CM Equity Overall Global Vanguard 0.11% 228 14,589 2%

16 QQQ ETF PF Equity Overall US PowerShares 0.20% 225 41,793 1%

17 SCHF ETF AA Equity Overall DM Charles Schwab 0.07% 219 6,874 3%

18 IWD ETF PF Equity Overall US BlackRock 0.20% 198 34,879 1%

19 EEM ETF PF Equity Overall EM BlackRock 0.69% 191 26,034 1%


21 VYM ETF CM Equity Overall US Vanguard 0.08% 173 17,606 1%


23 VGT ETF AA Equity Technology US Vanguard 0.10% 136 10,320 1%

24 MUB ETF AA Fixed Income Municipal US BlackRock 0.25% 133 8,202 2%

25 IXC ETF AA Equity Energy Global BlackRock 0.47% 130 1,160 11%

26 CSJ ETF CM Fixed Income Corporates US BlackRock 0.20% 130 11,111 1%

27 PFF ETF CM Fixed Income Preferred US BlackRock 0.47% 120 16,561 1%


29 EWC ETF CM Equity Overall DM BlackRock 0.48% 115 3,490 3%

30 CIU ETF AA Fixed Income Corporates US BlackRock 0.20% 113 6,607 2%



12 April 2017

US ETF Insights

Figure 117: Historical allocation of ETP assets by assetclass - Insurance Co.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are



Figure 118: Historical allocation of ETF assets by Market(Equity)- Insurance Co.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

US DM EM Global


Figure 119: Historical allocation of ETF assets by US Sectors (Equity) - Insurance Co.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

F A

ssets

Mark

et

Sh

are

Telecom

Materials

Utilities

Cons. Staples

Cons. Disc.

Industrials

Healthcare

Energy

Technology

Financials

Real Estate


Figure 120: Historical allocation of ETF assets by US Size and US Style (Equity) - Insurance Co.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are




12 April 2017

US ETF Insights

Figure 121: Historical allocation of ETF assets by Sector(Fixed Income)- Insurance Co.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Convertible

International

Senior Loans

Preferred

Securitized

EM debt

Municipal

Inflation

US Treasury

Aggregate

Corporates


Figure 122: Historical allocation of ETP assets by TER -Insurance Co.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

<0.2% 0.2%-0.4% 0.4%-0.6% 0.6%-0.8% >0.8%


Figure 123: Historical allocation of ETF assets by IndexProvider (Equity)- Insurance Co.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are

Other Providers

Nasdaq OMX

CRSP

MSCI

FTSE Russell

S&P Dow

Jones


Figure 124: Historical allocation of ETP assets by Issuer -Insurance Co.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Inst.

ET

P A

ssets

Mark

et

Sh

are

Other Issuers

Goldman Sachs

ProShares

ALPS

PIMCO

Deutsche AM

FlexShares

Guggenheim Inv.

VanEck Vectors

WisdomTree

First Trust

Charles Schwab

PowerShares

Vanguard

State Street

BlackRock

ers


Figure 125: Historical allocation of ETP assets by ProductType - Insurance Co.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

P A

ssets

Mark

et

Sh

are

AA CM PF LevInv


Figure 126: Historical allocation of ETF assets byManagement Style (Equity) - Insurance Co.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Inst.

ET

F A

ssets

Mark

et

Sh

are




12 April 2017

US ETF Insights

Custom ProfilesInstitutions in Retail Distribution Channels

We have found that, at times, the Investment Adviser, and Private Banking/WM classifications may not offer enough granularity, or a clear line separatingone institution type from the other. Therefore we decided to apply a differentproprietary classification for institutional investors which can provide furtherinsight into ETF usage. Our classification is focused on those institutions thatmany would label as retail investors because of their participation in retaildistribution channels. However, the truth is that many of these institutions meetthe definition of institutional investor, have full discretion over their assets, and runcentralized model portfolios using investment processes as sophisticated as thoseemployed by any other traditional institution. Furthermore, some even manageda significant level of institutional client assets. Thus, in our eyes, we see them asthe new institutional investor; a breed that, in part, has been the result of the ETF-enabled institutionalization of retail channels.

As of the end of 2016, our classification covered 330 institutions with $628bnin ETF assets or 43% of all institutional ETF assets. In this group we includedthe main ETF users among Wirehouses, Registered Investment Advisers (RIA),Independent Broker Dealers (IBD), Regional Broker Dealers (RBD), ETF assetmanagers, Discount Brokers, Independent Turnkey Asset Management Programs(ITAMP), and Robo-Advisors.

■ Wirehouse: this is a large integrated broker with a national, as opposed toregional, business. A wirehouse relies on a national network of financialadvisors to deliver multiple services, mostly, to high net worth clients.All wirehouses have a centralized due diligence and approval process forETFs, as well as their own model ETF portfolio solutions. A large portion ofthe ETF assets among wirehouses is invested in these model ETF portfoliosolutions, which in practice results in large multi asset portfolios ofinstitutional dimensions. Because of the size of the positions, wirehousestend to prefer large ETFs, with abundant liquidity at a low cost. There arefour widely recognized wirehouses in the US: Merrill Lynch, Wells Fargo,Morgan Stanley, and UBS.

■ Registered Investment Adviser (RIA): RIAs are independent advisers withfiduciary duty. They mostly focus on investment advice, but can alsoprovide other wealth management and financial planning services. Theymay target specific client segments (e.g. by geography, or net worth). Andbecause their size can vary significantly from just over $100 million toseveral billions of dollars, ETFs provide them with scalability and flexibilityto implement institutional-caliber solutions. They enjoy high autonomy interms of investment strategies and product selection. For this reason, theyare open to use a larger array of ETFs, but with smaller dollar allocations.In addition, their fiduciary nature makes them more cost-conscious andmore likely to prefer ETFs over other fund products.

■ Independent Broker Dealer (IBD): IBDs, like wirehouses, deliver theirservices to "middle America" through a network of financial advisors;however, financial advisors in the IBD channel act as independentcontractors rather than as employees of the firm as it is the case ofwirehouses. And although the home office at IBDs usually provides a


12 April 2017

US ETF Insights

structured due diligence process and offers some level of guidance on theselection of ETFs, IBDs can often have more flexibility in the selection ofETFs than wirehouses. In addition, many of them also offer centralizedETF model portfolios. Finally, the lack of a house view enforcement andpressure to offer proprietary products, make IBDs more likely to be opento a broader range of ETFs.

■ Regional Broker Dealer (RBD): RBDs are similar to wirehouses, withthe main difference that they focus on a specific geographic region, asopposed to nation wide coverage.

■ ETF Asset Managers (ETFAM): this group covers companies that provideasset management solutions which usually take the form of multiasset model portfolios where ETFs are used as key building blocks.Their portfolios can employ an strategic, tactical, or mixed investmentapproach. This group invests the majority of their assets in ETFs andis usually very active in the industry circuit (e.g. media, conferences,publications). ETFAMs can range in size of assets under managementfrom a couple hundreds of million of dollars to multiple billions undermanagement. In general, they have high autonomy over the usage andselection of products and are very open to a broad range of products. Nosingle criteria is more relevant than another, and as ETF specialists theyprefer overall product fit. Large asset managers (e.g. ETF issuers) whichprovide ETF model portfolios as well as many other solutions are excludedfrom this group.

■ Discount Broker (DB): DBs are brokers that execute on-line buy and sellorders at a very low cost compared to full-service brokers. DBs don'tprovide investment advice; although nowadays many DBs offer severalETF model portfolios via automated portfolio management services.Because these models tend to be off-the-shelf solutions, they use areduced number of large, very cheap, and liquid ETFs.

■ Independent Turnkey Asset Management Program (ITAMP): Independent(i.e. not affiliated with a Bank) TAMPs are fee-based technology platformsused by financial advisers, broker dealers, and other institutions to accessasset management services. The idea is that a user whose expertize doesnot lie in the management of investments can hire the services of a firmspecialized in investment management through a TAMP. TAMPs offerseveral model portfolio solutions, many of which employ ETFs as keybuilding blocks. The concentration of assets, as well as the range of ETFsutilized will depend on the popularity and the quantity of the models beingoffered.

■ Robo-Advisors: robo advisors or digital advisors are independent SECregistered investment adviser firms (i.e. fiduciary) that build multi assetportfolios using ETFs to meet specific client objectives by heavily relyingin digital investment advice tools. They don't necessarily invest exclusivelyin ETFs, or completely rule out human advice intervention; however ETFsor passive vehicles ,and digital tools remain a key pillar of their businessmodel. Robo-Advisors mostly favor a strategic approach to portfoliomanagement and focus on a reduced number of multi billon dollar ETFswith the cheapest price-tags. Large asset managers that also offer robo-advisory services among other client products are excluded.


12 April 2017

US ETF Insights

Figure 127: Institutions in retail distribution channels

2016 2015 $MM %

Wirehouse 4 262,442 238,423 24,019 10% 18%

RIA 222 98,435 76,256 22,178 29% 7%

IBD 33 75,562 73,739 1,823 2% 5%

Reg. B/D 8 58,856 38,214 20,642 54% 4%

ETF AM 43 43,787 40,302 3,485 9% 3%

Disc. Broker 5 40,121 28,078 12,043 43% 3%

ITAMP 10 33,897 24,605 9,292 38% 2%

Robo-Advisor 5 14,675 8,638 6,037 70% 1%

Sample Total 627,774 528,256 99,519

ETF Assets $MM YoY ChangeType # of Firms

% of Inst.

ETF Assets


In recent years, Robo-Advisors have been the fastest growing group in relativeterms by growing their ETF assets by 70% in the last year, and an annualized 188%in the last three years. Similarly, most groups have also experienced healthy assetgrowth, with the exception of IBDs, and ETF Asset Managers which experiencedsome headwinds in the last few years.

Figure 128: Historical ETF asset trends among institutions in retail distribution channels

-

50,000

100,000

150,000

200,000

250,000

300,000

Inst.

ET

F A

ssets

$M

M

Wirehouse RIA

IBD Reg. B/D

-

10,000

20,000

30,000

40,000

50,000

60,000

Inst.

ET

F A

ssets

$M

M

ETF AM Disc. Broker

ITAMP Robo-Advisor



12 April 2017

US ETF Insights

Figure 129: Select Non-RIA institutional ETF investors

2016 2015 $MM % 2016 2015 $MM %

Wirehouse Independent Broker Dealer (IBD) - Top 20

Merrill Lynch 88,783 90,099 (1,316) -1% Ameriprise Financial 14,937 7,809 7,127 91%

Wells Fargo Advisors 74,998 64,269 10,729 17% LPL Financial Holdings 10,579 27,896 (17,317) -62%

Morgan Stanley Wealth Management 56,839 49,916 6,923 14% Northwestern Mutual 9,937 5,905 4,032 68%

UBS Wealth Management 41,821 34,139 7,682 23% Commonwealth Financial Network 7,363 5,522 1,842 33%

Regional Broker Dealer (RBD) Wells Fargo Advisors Financial Network L 6,483 5,436 1,047 19%

Edward Jones 26,675 15,589 11,086 71% Raymond James Financial Services 5,248 3,916 1,332 34%

Raymond James & Associates 11,982 8,596 3,386 39% Cambridge Investment Research 3,376 2,554 822 32%

RBC Wealth Management 9,194 6,076 3,118 51% Securities America 2,313 1,812 501 28%

Stifel Nicolaus 4,362 2,905 1,458 50% MetLife Securities Inc. 1,984 1,311 673 51%

Janney Montgomery Scott 3,455 2,396 1,059 44% Lincoln Investment Planning 1,609 1,166 443 38%

Robert W. Baird 2,561 2,091 470 22% AXA Advisors 1,291 1,171 120 10%

Hilliard Lyons 558 504 54 11% Cetera Advisor Networks 1,130 850 279 33%

Wedbush Securities 69 57 12 22% First Allied Securities 992 933 59 6%

Discount Broker (DB) SII Investments 871 460 411 89%

Fidelity 17,441 13,219 4,221 32% Cetera Advisors 856 672 184 27%

Charles Schwab 13,981 8,037 5,944 74% National Planning Corporation 802 737 65 9%

TD Ameritrade 6,345 5,233 1,112 21% Voya Financial Advisors 764 507 257 51%

E-Trade 1,523 1,248 276 22% Ladenburg Thalmann Financial Services In 686 629 57 9%

Scott Trade 832 342 490 143% Investment Centers of America Inc. 610 399 211 53%

Independent Turn-key Asset Management Program (ITAMP) Transamerica Financial Advisors 517 1,088 (570) -52%

Envestnet 21,207 15,047 6,160 41% ETF Asset Managers (ETFAM) - Top 20

AssetMark 5,802 4,704 1,098 23% Windhaven Investment Management, Inc. 8,289 10,822 (2,533) -23%

SEI 2,729 1,482 1,247 84% ValMark Advisers, Inc. 3,949 4,269 (320) -8%

Brinker Capital 1,054 978 76 8% RiverFront Investment Group LLC 3,378 3,094 284 9%

Adhesion 913 820 92 11% Swan Global Investments LLC 3,086 2,148 938 44%

Eqis 905 790 115 15% Stadion Money Management LLC 3,000 2,548 452 18%

Efficient Advisors 691 459 233 51% CLS Investments LLC 2,271 2,200 71 3%

Sawtooth Solutions 272 - 272 Churchill Management Corp. 2,200 1,313 887 68%

Flexible Plan Investments 171 184 (13) -7% Swan Global Management LLC 1,886 1,288 598 46%

WrapManager 152 142 11 7% Synovus Trust Co., NA 1,613 1,384 228 17%

Independent Robo-Advisor Members Trust Co. 1,535 - 1,535

Betterment 6,761 3,248 3,513 108% Morningstar Investment Services LLC 1,414 767 647 84%

Wealthfront 3,414 2,474 940 38% Horizon Investments LLC 1,367 1,222 145 12%

FolioDynamix 1,970 1,329 642 48% Sage Advisory Services Ltd. Co. 730 760 (30) -4%

Personal Capital 1,631 891 739 83% Efficient Market Advisors LLC 664 489 175 36%

Future Advisor 899 696 203 29% Morningstar Investment Management LLC 578 608 (30) -5%

Main Management LLC 567 562 5 1%

Clark Capital Management Group, Inc. 547 530 17 3%

Nottingham Advisors, Inc. 541 536 5 1%

Glovista Investments LLC 531 435 95 22%

Astor Investment Management LLC 466 688 (222) -32%

YoY Chg ETF Assets $MM YoY Chg Institution Name Institution Name

ETF Assets $MM



12 April 2017

US ETF Insights

Figure 130: Top 50 RIA ETF investors by ETF assets

2016 2015 $MM % 2016 2015 $MM %

Registered Investment Adviser (RIA), Top 1-25 Registered Investment Adviser (RIA), Top 26-50

Creative Planning, Inc. 11,933 8,891 3,042 34% Gradient Investments LLC 790 513 278 54%

Edelman Financial Services LLC 7,945 6,632 1,314 20% Honkamp Krueger Financial Services, Inc. 718 - 718

United Capital Financial Advisers LLC 5,711 4,485 1,226 27% Linscomb & Williams, Inc. 715 597 118 20%

First Republic Investment Management, I 3,712 2,910 802 28% Pekin Singer Strauss Asset Management, 689 12 677 5803%

Veritable LP 2,786 2,461 326 13% Wealth Enhancement Advisory Services L 659 295 364 124%

Financial Engines Advisors LLC 2,442 - 2,442 JMG Financial Group Ltd. 633 448 185 41%

Ronald Blue & Co. LLC 2,403 1,638 765 47% Brookstone Capital Management LLC 592 454 138 31%

HighTower Advisors LLC 2,357 2,175 183 8% BKD Wealth Advisors LLC 578 441 138 31%

SCS Capital Management LLC 1,980 2,227 (247) -11% The Mather Group, Inc. 554 418 136 33%

Beacon Capital Management, Inc. 1,747 1,392 355 26% The Milestone Group, Inc. 554 517 37 7%

Private Advisor Group LLC 1,703 1,074 629 59% Hirtle, Callaghan & Co. LLC 553 408 145 36%

Alesco Advisors LLC 1,299 1,234 65 5% Adviser Investments LLC 549 406 142 35%

Pinnacle Advisory Group, Inc. 1,295 1,013 282 28% Sand Hill Global Advisors LLC 531 436 95 22%

Ballentine Partners LLC 1,183 980 203 21% CWM LLC 505 408 97 24%

Choate Investment Advisors LLC 1,178 1,151 27 2% MAI Capital Management LLC 487 443 44 10%

Aspiriant LLC 991 917 74 8% Level Four Advisory Services LLC 474 - 474

Hanson McClain, Inc. 919 515 404 78% Grimes & Co., Inc. 472 360 112 31%

Sullivan, Bruyette, Speros & Blayney LLC 879 25 854 3380% Sequoia Financial Advisors LLC 457 149 308 207%

Balentine LLC 862 420 442 105% Balasa Dinverno Foltz LLC 443 447 (4) -1%

Destination Wealth Management, Inc. 859 714 145 20% Carroll Financial Associates, Inc. 421 240 181 75%

AT Investment Advisers, Inc. 834 906 (72) -8% Miracle Mile Advisors LLC 408 272 136 50%

Bingham Osborn & Scarborough LLC 824 709 115 16% Signature Estate & Investment Advisors L 407 324 82 25%

Johnson Investment Counsel, Inc. 808 703 105 15% MCF Advisors LLC 406 334 72 22%

Homrich & Berg, Inc. 808 834 (26) -3% GenSpring Family Offices LLC 406 360 46 13%

Truepoint, Inc. 807 667 140 21% KLS Professional Advisors Group LLC 405 740 (335) -45%

ETF Assets $MMInstitution Name

ETF Assets $MM YoY Chg Institution Name

YoY Chg


Latam Pension Funds

The Latin American pension fund system including Mexico, Chile, Peru, andColombia is probably the most relevant pension system for ETFs in the world.However, because many of the Latam pension funds are not required to file 13Fforms, their relevance in terms of ETF asset ownership is many times understated.Fortunately much of these data can be sourced from local regulators, thusallowing us to perform a special ETF ownership analysis of this important usergroup.

We estimate that the 25 pension funds in our Latam system held more than $38bnin ETF assets as of the end of 2016, down from a high of almost $55bn on 2014.This represented more than 9% of the $412bn under management in the wholepension system.

Pensions in Mexico and Chile continue to be the largest users in absolute termswith $13.9bn and $9.6bn in ETF assets, respectively; however pensions in Peruand Colombia have begun to catch up on the back of healthy growth in ETFusage which took their ETF assets to $7.8bn and $7.2bn at the end of last year,respectively.

In relative terms, Chile allocates the smallest portion (<5%) of system assetsamong country pension systems; while Peru exhibits the highest allocation closeto a 20% of its system assets. Colombia and Mexico, on the other hand, allocate10%, and 11%, respectively.

We also notice that smaller pension fund systems, and smaller pension funds,are more likely to allocate a major portion of their assets to ETFs.


12 April 2017

US ETF Insights

In terms of usage, most Latam pension funds use ETFs for implementing theirinternational equity allocation positions, although some small investments inLatam equity, fixed income, commodity, and even leveraged products have alsobeen seen. However, in general pension funds would invest in ETFs offeringexposure to equities in the US, Europe, the Pacific, and Emerging Markets. USsector equity investing is particularly popular among Latam pensions and, attimes, it can be used as a proxy for stock picking. Moreover, ETFs are mostly usedtactically as satellite positions, completion, or cash management vehicles.

These pension managers are subject to strict regulation, with most countrieshaving specific approval processes for ETFs. Some of these processes can beparticularly challenging for smaller ETF issuers. In addition, in some countriesregulation also extends into trading putting a lot of focus on execution costs andsettlement processes.

Latam pension funds usually make large dollar allocations, and therefore usuallyprefer large, liquid, and efficient products. Efficiency for them translates into acombination of cheap expense ratio, low trading cost, and good performancetracking.

Within the international equity allocations, ETFs usually compete for market sharehead to head against active Mutual Funds. While funds in some countries such asMexico, Colombia, and Peru tend to prefer ETFs for international equity exposure,Chilean pensions prefer mutual funds.

Figure 131: Historical ETF assets in Latam pension system

0%

2%

4%

6%

8%

10%

12%

14%

0

10,000

20,000

30,000

40,000

50,000

60,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

ET

F A

sse

ts a

s %

of

To

tal

Ass

ets

ET

F A

sse

ts $

MM

Colombia Peru

Chile Mexico

% of Total Assets

Source: Deutsche Bank, Superintendencia de Pensiones, CONSAR, Superintendencia Financiera, Superintendencia de Banca, Seguros y AFP.Data for Peru is as of Oct 2016.


12 April 2017

US ETF Insights

ChileThe Chilean pension system is composed of six different pension fund managers(AFPs) with a combined level of assets of more than $175bn at the end of 2016.The largest four AFPs concentrate over 90% of the assets. All of them use ETFs,with AFP Provida holding the largest amount of ETF assets ($3.4bn) as of lastOctober 2016.

Figure 132: Historical ETF assets in the Chilean pensionsystem

0%

2%

4%

6%

8%

10%

12%

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Pen

sio

n E

TF a

ssets

as %

of

tota

l

assets

Pen

sio

n E

TF A

ssets

[U

S$

MM

]

ETF Assets (US-listed)

% of Total Assets

Source: Deutsche Bank, Superintendencia de Pensiones.

Figure 133: ETF assets by Chilean pension fund Oct '16

0%

1%

2%

3%

4%

5%

6%

7%

8%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Provida Cuprum Habitat Capital Modelo PlanVital

Pen

sio

n E

TF a

ssets

as %

of

tota

l assets

Pen

sio

n E

TF A

ssets

[U

S$

MM

]

ETF Assets (US-listed) % of Total Assets

Source: Deutsche Bank, Superintendencia de Pensiones. Data as of Oct 2016.

ColombiaThe Colombian pension system is composed of four different pension fundmanagers (AFPs) with a combined level of assets of about $64bn at the end of2016. The largest two AFPs, Porvenir and Proteccion, concentrate over 80% ofthe assets. All of them use ETFs, with AFP Porvenir holding the largest amountof ETF assets ($3.0bn) as of the end of last year.

Figure 134: Historical ETF assets in the Colombianpension system

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Pen

sio

n E

TF a

ssets

as %

of

tota

l

assets

Pen

sio

n E

TF A

ssets

[U

S$

MM

]


% of Total Assets

Source: Deutsche Bank, Superintendencia Financiera.

Figure 135: ETF assets by Colombian pension fund Dec'16

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

Porvenir Proteccion Colfondos Old Mutual

Pen

sio

n E

TF a

ssets

as %

of

tota

l

assets

Pen

sio

n E

TF A

ssets

[U

S$

MM

]


Source: Deutsche Bank, Superintendencia Financiera.


12 April 2017

US ETF Insights

MexicoThe Mexican pension system is composed of eleven different pension fundmanagers (Afores) with a combined level of assets of more than $130bn as of theend of 2016. The largest four Afores, XXI Banorte, Banamex, Sura, and ProfuturoGNP, concentrate almost 70% of the assets. Although we do not have individuallevel data for the Afores, we estimate that about 75% of their internationalequity allocation is implemented using ETFs. The Afores allocated 13.9% of theircombined portfolio to non-domestic equity as of the end of 2016.

Figure 136: Historical ETF assets in the Mexican pensionsystem

0%

2%

4%

6%

8%

10%

12%

14%

-

5,000

10,000

15,000

20,000

25,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Pen

sio

n E

TF a

ssets

as %

of

tota

l

assets

Pen

sio

n E

TF A

ssets

(est)

[U

S$

MM

] ETF Assets (US-listed) est.

% of Total Assets

Source: Deutsche Bank, CONSAR. ETF assets are estimated.

Figure 137: Total assets by Mexican pension fund Dec '16

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

20

16 T

ota

l Assets

[U

S$

] Total System Assets

Source: Deutsche Bank, CONSAR.

PeruThe Peruvian pension system is composed of four different pension fundmanagers (AFPs) with a combined level of assets of about $40bn as of October2016. The largest three AFPs, Integra, Prima, and Profuturo, concentrate almostthe entirety of the assets. All of them use ETFs, with AFP Integra and AFPProfuturo holding $2.9bn each as of the end of last October.

Figure 138: Historical ETF assets in the Peruvian pensionsystem

0%

5%

10%

15%

20%

25%

30%

-

2,000

4,000

6,000

8,000

10,000

12,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Pen

sio

n E

TF a

ssets

as %

of

tota

l

assets

Pen

sio

n E

TF A

ssets

[U

S$

MM

]


% of Total Assets

Source: Deutsche Bank, Superintendencia de Banca, Seguros y AFP. Data as of Oct 2016

Figure 139: ETF assets by Peruvian pension fund Oct '16

0%

5%

10%

15%

20%

25%

30%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

Integra Profuturo Prima Habitat

Pen

sio

n E

TF a

ssets

as %

of

tota

l assets

Pen

sio

n E

TF A

ssets

[U

S$

MM

]


Source: Deutsche Bank, Superintendencia de Banca, Seguros y AFP. Data as of Oct 2016


12 April 2017

US ETF Insights

International Asset Managers

One of the reasons we like US-listed ETFs when we analyze ETF flows isthe geographical diversity of their investor base. Therefore we decided tohighlight some of the institutional international asset managers holding ETFsat the end of last year. Our sample of almost 400 institutional asset managersexcludes pension funds, brokers, and international subsidiaries of US ETFissuers, and as of the end of 2016 accounted for more than $80 billion in ETFassets. Leading our list of users we have asset managers from Canada, Japan,United Kingdom, Switzerland, and Israel. Furthermore, we identify mutual fundproviders, insurance companies, sovereign wealth funds, central banks, andprivate banks among these international ETF users. Most of these investors useETFs as main building blocks in multi asset portfolios, in completion strategies,or for liquidity purposes.

Figure 140: International Asset Manager summary table by country

2016 2015 $MM %

Canada 45 28,586 20,621 7,964 39% 2.0%

Japan 22 19,340 13,547 5,792 43% 1.3%

United Kingdom 43 5,981 7,503 (1,522) -20% 0.4%

Switzerland 53 4,454 4,091 363 9% 0.3%

Israel 27 3,443 3,697 (254) -7% 0.2%

South Korea 2 3,073 1,760 1,313 75% 0.2%

Sweden 9 2,049 349 1,701 488% 0.1%

France 9 1,589 1,939 (350) -18% 0.1%

Italy 7 1,522 1,463 58 4% 0.1%

Hong Kong 7 1,504 552 951 172% 0.1%

Spain 53 1,451 1,789 (338) -19% 0.1%

Chile 20 1,386 2,093 (707) -34% 0.1%

Mexico 19 1,276 2,340 (1,063) -45% 0.1%

Australia 3 1,082 135 947 702% 0.1%

Singapore 6 853 636 217 34% 0.1%

Other 72 2,825 3,054 (229) -7% 0.2%

Sample Total 80,413 65,570 14,844 5.6%

Country # of FirmsETF Assets $MM YoY Change % of Inst. ETF

Assets


Figure 141: Historical ETF assets in select international asset managers bycountry

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Inst.

ET

F A

ssets

$M

M

Other

Singapore

Australia

Mexico

Chile

Spain

Hong Kong

Italy

France

Sweden

South Korea

Israel

Switzerland

United Kingdom

Japan

Canada



12 April 2017

US ETF Insights

Figure 142: Top 50* international asset managers by ETF Assets

2016 2015 $MM %

RBC Wealth Management Canada Asset Manager 9,194 6,076 3,118 51%

1832 Asset Management LP Canada Asset Manager 4,930 4,023 907 23%

National Mutual Insurance Fed. of Agricultural Cooperatives Japan Insurance Co. 4,192 2,789 1,403 50%

TD Asset Management, Inc. Canada Asset Manager 3,766 - 3,766

Nomura Securities Co., Ltd. (Private Banking) Japan Priv. Bank 3,602 - 3,602

Nissay Asset Management Corp. Japan Asset Manager 2,262 1,560 702 45%

Asset Management One Co., Ltd. Japan Asset Manager 2,139 - 2,139

Psagot Mutual Funds Ltd. Israel Asset Manager 2,083 2,029 54 3%

Migdal Insurance Co. Ltd. Japan Insurance Co. 2,079 - 2,079

The Norinchukin Bank (Investment Management) Japan Asset Manager 1,903 1,768 135 8%

Handelsbanken Fonder AB Sweden Asset Manager 1,878 128 1,750 1365%

HSBC Global Asset Management (UK) Ltd. United Kingdom Asset Manager 1,799 3,803 (2,004) -53%

RBC Dominion Securities, Inc. (Investment Management) Canada Asset Manager 1,799 - 1,799

Mirae Asset Global Investments Co., Ltd. South Korea Asset Manager 1,763 502 1,260 251%

BMO Asset Management, Inc. Canada Asset Manager 1,602 - 1,602

Banca d'Italia (Investment Portfolio) Italy Central Bank 1,338 1,203 135 11%

Korea Investment Corp. (Investment Management) South Korea Sov. Wealth Fund 1,310 1,258 52 4%

Natixis Asset Management SA France Asset Manager 1,204 - 1,204

AMP Capital Investors Ltd. Australia Asset Manager 1,066 124 942 762%

Schweizerische Ruckversicherungs-Gesellschaft AG (Invt Port) Switzerland Insurance Co. 925 1,024 (99) -10%

FIL Investment Advisors (UK) Ltd United Kingdom Asset Manager 885 461 424 92%

Manulife Asset Management (Hong Kong) Ltd. Hong Kong Asset Manager 854 193 661 343%

Banque Pictet & Cie SA Switzerland Priv. Bank 798 617 181 29%

AGF Investments, Inc. Canada Asset Manager 774 746 27 4%

Fiduciary Trust Company of Canada Canada Asset Manager 759 - 759

Caixabank Asset Management SGIIC SA Spain Asset Manager 753 847 (94) -11%

Eastspring Investments (Singapore) Ltd. Singapore Asset Manager 747 553 195 35%

Pictet Asset Management SA Switzerland Asset Manager 656 544 112 21%

Fiera Capital Corp. (Investment Management) Canada Asset Manager 636 545 91 17%

CIBC Asset Management, Inc. Canada Asset Manager 627 494 133 27%

Industrial Alliance Investment Management, Inc. Canada Asset Manager 609 - 609

Schroder Investment Management Ltd. United Kingdom Asset Manager 603 - 603

Mizuho Bank Ltd. (Private Banking) Japan Priv. Bank 582 141 441 312%

Hexavest, Inc. Canada Asset Manager 525 - 525

ING Bank NV (Investment Management) Netherlands Asset Manager 494 735 (241) -33%

Allianz Global Investors Japan Co., Ltd. Japan Asset Manager 486 - 486

Mandatum Henkivakuutusosakeyhtio Oy Finland Insurance Co. 481 - 481

Manulife Asset Management Ltd. Canada Asset Manager 477 - 477

Impulsora de Fondos Banamex SA de CV Mexico Asset Manager 441 1,054 (613) -58%

The Empire Life Insurance Co. (Investment Portfolio) Canada Insurance Co. 424 - 424

Barclays Bank Plc (Private Banking) United Kingdom Priv. Bank 416 - 416

Harel-Pia Mutual Funds Ltd. Israel Asset Manager 411 458 (47) -10%

GWL Investment Management Canada Asset Manager 378 - 378

The Dai-ichi Life Insurance Co., Ltd. (Investment Portfolio) Japan Insurance Co. 378 - 378

RBC Private Counsel (USA), Inc. Canada Asset Manager 377 - 377

Segantii Capital Management Ltd. Hong Kong Hedge Fund 375 - 375

Fukoku Mutual Life Insurance Co. (Investment Portfolio) Japan Insurance Co. 318 - 318

JPMorgan Asset Management (UK) Ltd. United Kingdom Asset Manager 315 - 315

Baring Asset Management Ltd. United Kingdom Asset Manager 313 - 313

BBVA Asset Management SA SGIIC Spain Asset Manager 301 - 301

Institution NameETF Assets $MM YoY Chg

Country Investor Type

Source: Deutsche Bank, Bloomberg Finance LP, FactSet. *From the 397 international asset managers identified.


12 April 2017

US ETF Insights

Appendix A: InstitutionalETF ownership definitionsInstitutional investor definitions

We classify an investor as an institutional investor according to the SEC definitionof institutional investment manager and the FactSet classification for institutionalinvestor types.

The SEC provides the following definition for institutional investment manager:

“An institutional investment manager is an entity that either invests in, or buys andsells, securities for its own account. For example, banks, insurance companies,and broker/dealers are institutional investment managers. So are corporations andpension funds that manage their own investment portfolios.

An institutional investment manager is also a natural person or an entity thatexercises investment discretion over the account of any other natural person orentity. For example, an investment adviser that manages private accounts, mutualfund assets, or pension plan assets is an institutional investment manager. So is thetrust department of a bank.

A trustee is an institutional investment manager, but a natural person who exercisesinvestment discretion over his or her own account is not an institutional investmentmanager.”

The FactSet classification relevant to ETF holders involves fourteen institutionalinvestor types, out of which Investment Adviser, Broker, and Private Banking/WMare the most relevant ones. Mutual Fund Manager, Hedge Fund Manager, andPension Fund make up the second, albeit distant, group; while the rest of theinstitutional investor types are less significant in terms of ETF assets held. Thefollowing figure presents the definitions for each of the fourteen investor types.


12 April 2017

US ETF Insights

Figure 143: FactSet Institutional Investor Type definitions relevant to ETFs

Institutional Investor Type Definition

Arbitrage A financial institution that engages in arbitrage. Such firms look for market inefficiencies and

securities that they feel are mis-priced, and then undertake trades that allow them to make risk-free

profits.

Bank Investment Division The division within a bank responsible for managing the bank's own portfolio of investments.

Broker An institution that introduces two parties in a transaction to each other in exchange for a fee. Sell-side

should be chosen as the filer type.

Family Office A family office is a private company that manages investments and trusts for a single wealthy family.

The company's financial capital is the family's own wealth.

Foundation/Endowment Manager Non-profit organizations, including universities and religions, whose investment activities support their

activities.

Fund of Funds Manager An Investment firm whose main focus is to manage mutual funds or insurance products that are

investing in other mutual funds. The firm researches fund management companies to select funds it

will use to construct its portfolios.

Fund of Hedge Funds Manager A fund of hedge funds manager creates funds which invest in several different hadge funds to spread

the risks. Funds of hedge funds select hedge fund managers and construct portfolios based upon

those selections.

Hedge Fund Manager A fund that uses derivative securities and is extremely risky. Typically, these companies are very

secretive about their investments. Includes funds that use puts, calls, margins, and shorts, often as

"hedges" to reduce risk.

Insurance Company The insurer profits by investing the premiums it receives in securities. This firm type is used for the

group within the insurance company responsible for managing its investment portfolio.

Investment Adviser An Investment Advisor provides investment advice and manages a portfolio of securities. A firm will

be coded investment advisor if the majority of its asset under management is not coming from the

mutual funds they manage.

Mutual Fund Manager An investment firm with the majority of the assets they manage coming from the mutual funds they

manage. A mutual fund raises money from shareholders and reinvests the money in securities.

Pension Fund Manager A fund established by a corporation or a government to pay the benefits of retired workers.

Private Banking/Wealth Mgmt The area of the bank responsible for managing the investments of high net worth clients.

Sovereign Wealth Manager Firm set up to manage the investments of a Sovereign Wealth Fund.

Source: FactSet

Institutional ownership data definition

The ETF holder data used in this report has been sourced from FactSet’sOwnership database called FactSet Global Ownership (formerly known asLionShares). This database is fed primarily with data from the 13F SEC filings.According to the SEC, Form 13F is a reporting form filed by “an institutionalinvestment manager that uses the U.S. mail (or other means or instrumentalityof interstate commerce) in the course of its business, and exercises investmentdiscretion over $100 million or more in Section 13(f) securities”. ETFs fall withinSection 13(f) securities and hence need to be reported. The deadline for reportingeach quarterly or annual period is 45 days after the end of the period. For example,the deadline for filing Form 13F for last year end holdings was February 14th,2017. Our data has been downloaded after February 27th in order to include themost updated filings for Q4 2016.

FactSet also captures data for those institutional holders not required to file 13Fforms through its own collection process.

Retail participation in ETFs is measured as the complement of the institutionalparticipation within the total ETF assets. To put it simply, retail ownership is equal


12 April 2017

US ETF Insights

to the total amount of ETF assets minus the value of the ETF institutional assetsas reported in FactSet.

We believe that the completeness, quality, and consistency of the ETF institutionaldata is satisfactory for the purpose of the current study, and we are not aware ofany significant data issue which could affect the overall findings of the report.

Calculation of Institutional Ownership %The institutional ownership % is calculated by dividing the institutional shareholdings as reported for the last quarter of the calendar year by the total numberof ETF shares outstanding at the end of the same year. For example, for last yearwe divided the institutional share holdings as reported for Q4 2016 by the totalnumber of ETF shares outstanding as of December 31st, 2016. In our sample,we covered the full population of ETFs, both historically and as of the end ofDecember 2016. The number of listed ETFs at the end of 2016 was 1,708, whilethe number of products at the end of year 2000 was 89.

Historical changesFactSet usually updates their historical ownership data to account for events suchas bankruptcies, mergers, name changes, or investor type changes. Therefore wehave downloaded all the historical data together with the most current end ofyear data to ensure the consistency of institutional ownership historical trends.However, historical changes related to fund objective, index provider, issuingcompany, structure, total expense ratios, etc. are not taken into considerationwhen aggregating institutional ownership data for historical trend purposes. Inother words, historical trends are based on the historical institutional ownershipof the ETF or ETV and the most current classification and values available as ofthe end of last year.


12 April 2017

US ETF Insights

Appendix B: OtherdefinitionsETP Universe Definitions

Exchange-Traded Products (ETPs)We define an exchange-traded product (ETP) as a secure (funded orcollateralized) open-ended exchange-traded equity with no embedded optionalityand marketwide appeal to investors. This includes exchange traded funds (ETF),and exchange-traded vehicles (ETV). The vast majority of instruments are ETFs(~98% in AUM).

Exchange-Traded Funds (ETFs)ETFs are open-ended funds which are listed on an exchange and offer intra-daydual liquidity to access diversified investments in a transparent, cheap, and taxefficient way. ETFs indexed to equity and fixed income benchmarks are registeredunder the investment company act of 1940. Only physical index replicationtechniques are permissible by this legislation while synthetic replication is notallowed.

Exchange-traded vehicles (ETVs)This terminology typically refers to grantor trusts that exist in the US market.These instruments track primarily commodity benchmarks. They differ fromETFs in that they are registered under the Securities Act of 1933 and not theInvestment Company Act of 1940, hence they are not classed as funds. Vehiclesthat replicate commodity benchmarks, more often known as pools, and fundstargeting alternative index returns are formed under the Commodities ExchangeAct and are listed under the 33 Securities Act, and report under 34 Corporate Act.

Management Style or Product Strategy Definitions

BetaThis is the main group with the largest number of products and assets.Within this category we account for all those ETFs that track an index whichemploys a market capitalization weighting methodology, and a simple selectionmethodology usually involving screenings such as minimum market cap andliquidity levels, or profitability levels. ETFs in this group are also referred to as“plain-vanilla” ETFs. Some examples of indices falling within this category are:S&P 500, S&P 400, S&P 600, MSCI EAFE, MSCI EM, Russell 2000, and Russell1000, to name a few.

Beta+In this group we include every product that offers any level of leverage or inverseimplementation. For example, an ETF offering access to twice the daily returnsof the S&P 500 on either direction (long or short) would be classified under thiscategory.

ActiveClassifying products in this group is still easy; basically if the ETF doesn’t trackany index then we classify the fund as active.

Enhanced Beta (aka Smart Beta)


12 April 2017

US ETF Insights

This category is reserved for those ETFs that also track an index, but whichfollow more elaborated strategies. After defining an index universe, there aretwo main levers that determine most of the risk/return profile of the index: (1)the selection criteria, and (2) the weighting criteria. In their selection process,enhanced beta ETFs usually employ additional screening processes and scoringsystems involving multiple factors beyond just minimum market cap and liquiditylevels. For example, they could include growth or value scores, dividends paidor dividend yield, earnings, volatility, or momentum screens, to name a few.The weighting methodology of enhanced beta ETFs is usually anything butmarket cap weighted, it can include simple equal weighting or variations of it,optimized weights, and other metric-specific weights such as those based ondividends paid, inverse volatility, dividend yield, fundamental multi factor scores,earnings, and revenues, to name a few. An enhanced beta ETF will either have anontraditional selection methodology, a non-traditional weighting methodology,or a combination of both.

Product Type Definitions

Asset Allocation ETFsThis group covers all ETFs with exception of levered and inverse products. Theseare usually good products for market access strategies, portfolio completion, andcore positions. They are also efficient building blocks for multi asset strategies.When selecting these products, major emphasis should be set on the desiredexposure, tracking efficiency, primary liquidity (i.e. the liquidity of the underlyingbasket), and cost.

Cash Management ETFsThis group covers a more selected group of ETFs which in addition to beinggood asset allocation tools, also serves a series of cash management portfolioneeds. For example, these products are very good for equitizing cash betweentransitions, around reporting periods (window dressing), and during tax lossharvesting. These ETFs usually have good liquidity, large fund size, and lowcost, all of which makes it easier to execute sizeable short-term transactions,therefore secondary market liquidity and fund size tend to be a more relevantfactor compared to asset allocation ETFs. The most popular asset allocation usageof these funds is as core building blocks.

Pseudo Futures ETFsThis group covers an even more selected sample of ETFs which in additionto being good asset allocation and cash management tools can also be usedfor fulfilling risk management functions such as risk hedging, portable alphastrategies, or tactical shorts. Many times they also trade at a cheaper level thantheir underlying basket, and offer large amounts of liquidity which can make themattractive for market making activities as well. Secondary and short liquidity (easeto borrow), and fund size tend to be more relevant characteristics at the momentof selecting this type of ETFs. There is usually no more than one pseudo futuresETF per asset class. The most popular asset allocation usage of these fundsis among portfolios that require more liquidity given their size or more tacticalnature.


12 April 2017

US ETF Insights

Appendix 1

Important Disclosures

*Other information available upon request

*Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced fromlocal exchanges via Reuters, Bloomberg, and other vendors. Other information is sourced from Deutsche Bank, subjectcompanies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other thanthe primary subject of this research, please see the most recently published company report or visit our global disclosurelook-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr. Aside from within this report,important conflict disclosures can also be found at https://gm/db.com/equities under the "Disclosures Lookup" and "Legal"tabs. Investors are strongly encouraged to review this information before investing.

Analyst Certification

The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s). In addition,the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendationor view in this report. Sebastian Mercado

Hypothetical Disclaimer

Backtested, hypothetical or simulated performance results have inherent limitations. Unlike an actual performancerecord based on trading actual client portfolios, simulated results are achieved by means of the retroactive applicationof a backtested model itself designed with the benefit of hindsight. Taking into account historical events the backtestingof performance also differs from actual account performance because an actual investment strategy may be adjustedany time, for any reason, including a response to material, economic or market factors. The backtested performanceincludes hypothetical results that do not reflect the reinvestment of dividends and other earnings or the deduction ofadvisory fees, brokerage or other commissions, and any other expenses that a client would have paid or actually paid.No representation is made that any trading strategy or account will or is likely to achieve profits or losses similar tothose shown. Alternative modeling techniques or assumptions might produce significantly different results and prove tobe more appropriate. Past hypothetical backtest results are neither an indicator nor guarantee of future returns. Actualresults will vary, perhaps materially, from the analysis.

Equity Rating Key Equity rating dispersion and banking relationships

Buy: Based on a current 12- month view of total share-holderreturn (TSR = percentage change in share price from currentprice to projected target price plus pro-jected dividend yield ) ,we recommend that investors buy the stock.Sell: Based on a current 12-month view of total share-holderreturn, we recommend that investors sell the stock.Hold: We take a neutral view on the stock 12-months out and,based on this time horizon, do not recommend either a Buyor Sell.

Newly issued research recommendations and target pricessupersede previously published research.

Regulatory Disclosures


http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr

https://gm.db.com/equities

12 April 2017

US ETF Insights

1.Additional InformationInformation on ETFs is provided strictly for illustrative purposes and should not be deemed an offer to sell or asolicitation of an offer to buy shares of any fund that is described in this document. Consider carefully any fund'sinvestment objectives, risk factors, and charges and expenses before investing. This and other information can be foundin the fund's prospectus. Prospectuses about db X-trackers funds and Powershares DB funds can be obtained by calling1-877-369-4617 or by visiting www.DBXUS.com. Read prospectuses carefully before investing. Past performance is notnecessarily indicative of future results. Investing involves risk, including possible loss of principal. To better understandthe similarities and differences between investments, including investment objectives, risks, fees and expenses, it isimportant to read the products' prospectuses. Shares of ETFs may be sold throughout the day on an exchange throughany brokerage account. However, shares may only be redeemed directly from an ETF by authorized participants, in verylarge creation/redemption units. Transactions in shares of ETFs will result in brokerage commissions and will generatetax consequences. ETFs are obliged to distribute portfolio gains to shareholders. Deutsche Bank may be an issuer,advisor, manager, distributor or administrator of, or provide other services to, an ETF included in this report, for which itreceives compensation. db X-trackers and Powershares DB funds are distributed by ALPS Distributors, Inc. The opinionsexpressed are those of the authors and do not necessarily reflect the views of DB, ALPS or their affiliates.

Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the"Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing.


http://www.dbxus.com/

12 April 2017

US ETF Insights

Additional Information?The information and opinions in this report were prepared by Deutsche Bank AG or one of its affiliates (collectively"Deutsche Bank"). Though the information herein is believed to be reliable and has been obtained from public sourcesbelieved to be reliable, Deutsche Bank makes no representation as to its accuracy or completeness.

If you use the services of Deutsche Bank in connection with a purchase or sale of a security that is discussed in this report,or is included or discussed in another communication (oral or written) from a Deutsche Bank analyst, Deutsche Bank mayact as principal for its own account or as agent for another person.

Deutsche Bank may consider this report in deciding to trade as principal. It may also engage in transactions, for itsown account or with customers, in a manner inconsistent with the views taken in this research report. Others withinDeutsche Bank, including strategists, sales staff and other analysts, may take views that are inconsistent with those takenin this research report. Deutsche Bank issues a variety of research products, including fundamental analysis, equity-linkedanalysis, quantitative analysis and trade ideas. Recommendations contained in one type of communication may differfrom recommendations contained in others, whether as a result of differing time horizons, methodologies or otherwise.Deutsche Bank and/or its affiliates may also be holding debt or equity securities of the issuers it writes on. Analysts arepaid in part based on the profitability of Deutsche Bank AG and its affiliates, which includes investment banking, tradingand principal trading revenues.

Opinions, estimates and projections constitute the current judgment of the author as of the date of this report. They donot necessarily reflect the opinions of Deutsche Bank and are subject to change without notice. Deutsche Bank providesliquidity for buyers and sellers of securities issued by the companies it covers. Deutsche Bank research analysts sometimeshave shorter-term trade ideas that are consistent or inconsistent with Deutsche Bank's existing longer term ratings. Tradeideas for equities can be found at the SOLAR link at http://gm.db.com. A SOLAR idea represents a high conviction beliefby an analyst that a stock will outperform or underperform the market and/or sector delineated over a time frame of noless than two weeks. In addition to SOLAR ideas, the analysts named in this report may from time to time discuss withour clients, Deutsche Bank salespersons and Deutsche Bank traders, trading strategies or ideas that reference catalystsor events that may have a near-term or medium-term impact on the market price of the securities discussed in this report,which impact may be directionally counter to the analysts' current 12-month view of total return or investment return asdescribed herein. Deutsche Bank has no obligation to update, modify or amend this report or to otherwise notify a recipientthereof if any opinion, forecast or estimate contained herein changes or subsequently becomes inaccurate. Coverage andthe frequency of changes in market conditions and in both general and company specific economic prospects make itdifficult to update research at defined intervals. Updates are at the sole discretion of the coverage analyst concerned or ofthe Research Department Management and as such the majority of reports are published at irregular intervals. This reportis provided for informational purposes only and does not take into account the particular investment objectives, financialsituations, or needs of individual clients. It is not an offer or a solicitation of an offer to buy or sell any financial instrumentsor to participate in any particular trading strategy. Target prices are inherently imprecise and a product of the analyst’sjudgment. The financial instruments discussed in this report may not be suitable for all investors and investors must maketheir own informed investment decisions. Prices and availability of financial instruments are subject to change withoutnotice and investment transactions can lead to losses as a result of price fluctuations and other factors. If a financialinstrument is denominated in a currency other than an investor's currency, a change in exchange rates may adverselyaffect the investment. Past performance is not necessarily indicative of future results. Unless otherwise indicated, pricesare current as of the end of the previous trading session, and are sourced from local exchanges via Reuters, Bloombergand other vendors. Data is sourced from Deutsche Bank, subject companies, and in some cases, other parties.

The Deutsche Bank Research Department is independent of other business areas divisions of the Bank. Details regardingour organizational arrangements and information barriers we have to prevent and avoid conflicts of interest with respectto our research is available on our website under Disclaimer found on the Legal tab.??Macroeconomic fluctuations often account for most of the risks associated with exposures to instruments that promiseto pay fixed or variable interest rates. For an investor who is long fixed rate instruments (thus receiving these cash flows),increases in interest rates naturally lift the discount factors applied to the expected cash flows and thus cause a loss.


http://gm.db.com/

12 April 2017

US ETF Insights

The longer the maturity of a certain cash flow and the higher the move in the discount factor, the higher will be theloss. Upside surprises in inflation, fiscal funding needs, and FX depreciation rates are among the most common adversemacroeconomic shocks to receivers. But counterparty exposure, issuer creditworthiness, client segmentation, regulation(including changes in assets holding limits for different types of investors), changes in tax policies, currency convertibility(which may constrain currency conversion, repatriation of profits and/or the liquidation of positions), and settlement issuesrelated to local clearing houses are also important risk factors to be considered. The sensitivity of fixed income instrumentsto macroeconomic shocks may be mitigated by indexing the contracted cash flows to inflation, to FX depreciation, or tospecified interest rates – these are common in emerging markets. It is important to note that the index fixings may -- byconstruction -- lag or mis-measure the actual move in the underlying variables they are intended to track. The choice of theproper fixing (or metric) is particularly important in swaps markets, where floating coupon rates (i.e., coupons indexed toa typically short-dated interest rate reference index) are exchanged for fixed coupons. It is also important to acknowledgethat funding in a currency that differs from the currency in which coupons are denominated carries FX risk. Naturally,options on swaps (swaptions) also bear the risks typical to options in addition to the risks related to rates movements.??Derivative transactions involve numerous risks including, among others, market, counterparty default and illiquidity risk.The appropriateness or otherwise of these products for use by investors is dependent on the investors' own circumstancesincluding their tax position, their regulatory environment and the nature of their other assets and liabilities, and as such,investors should take expert legal and financial advice before entering into any transaction similar to or inspired by thecontents of this publication. The risk of loss in futures trading and options, foreign or domestic, can be substantial. As aresult of the high degree of leverage obtainable in futures and options trading, losses may be incurred that are greaterthan the amount of funds initially deposited. Trading in options involves risk and is not suitable for all investors. Priorto buying or selling an option investors must review the "Characteristics and Risks of Standardized Options”, at http://www.optionsclearing.com/about/publications/character-risks.jsp. If you are unable to access the website please contactyour Deutsche Bank representative for a copy of this important document.?

Participants in foreign exchange transactions may incur risks arising from several factors, including the following: ( i)exchange rates can be volatile and are subject to large fluctuations; ( ii) the value of currencies may be affected bynumerous market factors, including world and national economic, political and regulatory events, events in equity anddebt markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government imposedexchange controls which could affect the value of the currency. Investors in securities such as ADRs, whose values areaffected by the currency of an underlying security, effectively assume currency risk.?

Unless governing law provides otherwise, all transactions should be executed through the Deutsche Bank entity in theinvestor's home jurisdiction. Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review thisinformation before investing.??United States: Approved and/or distributed by Deutsche Bank Securities Incorporated, a member of FINRA, NFA and SIPC.Analysts located outside of the United States are employed by non-US affiliates that are not subject to FINRA regulations.

Germany: Approved and/or distributed by Deutsche Bank AG, a joint stock corporation with limited liability incorporatedin the Federal Republic of Germany with its principal office in Frankfurt am Main. Deutsche Bank AG is authorized underGerman Banking Law and is subject to supervision by the European Central Bank and by BaFin, Germany’s FederalFinancial Supervisory Authority.

United Kingdom: Approved and/or distributed by Deutsche Bank AG acting through its London Branch at WinchesterHouse, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank AG in the United Kingdom is authorised by thePrudential Regulation Authority and is subject to limited regulation by the Prudential Regulation Authority and FinancialConduct Authority. Details about the extent of our authorisation and regulation are available on request.??Hong Kong: Distributed by Deutsche Bank AG, Hong Kong Branch.??


http://www.optionsclearing.com/about/publications/character-risks.jsp

http://www.optionsclearing.com/about/publications/character-risks.jsp



12 April 2017

US ETF Insights

India: Prepared by Deutsche Equities India Pvt Ltd, which is registered by the Securities and Exchange Board of India (SEBI)as a stock broker. Research Analyst SEBI Registration Number is INH000001741. DEIPL may have received administrativewarnings from the SEBI for breaches of Indian regulations.

Japan: Approved and/or distributed by Deutsche Securities Inc.(DSI). Registration number - Registered as a financialinstruments dealer by the Head of the Kanto Local Finance Bureau (Kinsho) No. 117. Member of associations: JSDA, TypeII Financial Instruments Firms Association and The Financial Futures Association of Japan. Commissions and risks involvedin stock transactions - for stock transactions, we charge stock commissions and consumption tax by multiplying thetransaction amount by the commission rate agreed with each customer. Stock transactions can lead to losses as a resultof share price fluctuations and other factors. Transactions in foreign stocks can lead to additional losses stemming fromforeign exchange fluctuations. We may also charge commissions and fees for certain categories of investment advice,products and services. Recommended investment strategies, products and services carry the risk of losses to principaland other losses as a result of changes in market and/or economic trends, and/or fluctuations in market value. Beforedeciding on the purchase of financial products and/or services, customers should carefully read the relevant disclosures,prospectuses and other documentation. "Moody's", "Standard & Poor's", and "Fitch" mentioned in this report are notregistered credit rating agencies in Japan unless Japan or "Nippon" is specifically designated in the name of the entity.Reports on Japanese listed companies not written by analysts of DSI are written by Deutsche Bank Group's analysts withthe coverage companies specified by DSI. Some of the foreign securities stated on this report are not disclosed accordingto the Financial Instruments and Exchange Law of Japan. Target prices set by Deutsche Bank's equity analysts are basedon a 12-month forecast period.

Korea: Distributed by Deutsche Securities Korea Co.?

South Africa: Deutsche Bank AG Johannesburg is incorporated in the Federal Republic of Germany (Branch RegisterNumber in South Africa: 1998/003298/10).??Singapore: by Deutsche Bank AG, Singapore Branch or Deutsche Securities Asia Limited, Singapore Branch (One RafflesQuay #18-00 South Tower Singapore 048583, +65 6423 8001), which may be contacted in respect of any matters arisingfrom, or in connection with, this report. Where this report is issued or promulgated in Singapore to a person who is not anaccredited investor, expert investor or institutional investor (as defined in the applicable Singapore laws and regulations),they accept legal responsibility to such person for its contents.

Taiwan: Information on securities/investments that trade in Taiwan is for your reference only. Readers shouldindependently evaluate investment risks and are solely responsible for their investment decisions. Deutsche Bank researchmay not be distributed to the Taiwan public media or quoted or used by the Taiwan public media without written consent.Information on securities/instruments that do not trade in Taiwan is for informational purposes only and is not to beconstrued as a recommendation to trade in such securities/instruments. Deutsche Securities Asia Limited, Taipei Branchmay not execute transactions for clients in these securities/instruments.??Qatar: Deutsche Bank AG in the Qatar Financial Centre (registered no. 00032) is regulated by the Qatar Financial CentreRegulatory Authority. Deutsche Bank AG - QFC Branch may only undertake the financial services activities that fall withinthe scope of its existing QFCRA license. Principal place of business in the QFC: Qatar Financial Centre, Tower, WestBay, Level 5, PO Box 14928, Doha, Qatar. This information has been distributed by Deutsche Bank AG. Related financialproducts or services are only available to Business Customers, as defined by the Qatar Financial Centre RegulatoryAuthority.

Russia: This information, interpretation and opinions submitted herein are not in the context of, and do not constitute,any appraisal or evaluation activity requiring a license in the Russian Federation.

?Kingdom of Saudi Arabia: Deutsche Securities Saudi Arabia LLC Company, (registered no. 07073-37) is regulated bythe Capital Market Authority. Deutsche Securities Saudi Arabia may only undertake the financial services activities thatfall within the scope of its existing CMA license. Principal place of business in Saudi Arabia: King Fahad Road, Al OlayaDistrict, P.O. Box 301809, Faisaliah Tower - 17th Floor, 11372 Riyadh, Saudi Arabia.??


12 April 2017

US ETF Insights

United Arab Emirates: Deutsche Bank AG in the Dubai International Financial Centre (registered no. 00045) is regulatedby the Dubai Financial Services Authority. Deutsche Bank AG - DIFC Branch may only undertake the financial servicesactivities that fall within the scope of its existing DFSA license. Principal place of business in the DIFC: Dubai InternationalFinancial Centre, The Gate Village, Building 5, PO Box 504902, Dubai, U.A.E. This information has been distributed byDeutsche Bank AG. Related financial products or services are only available to Professional Clients, as defined by theDubai Financial Services Authority.

Australia: Retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial productreferred to in this report and consider the PDS before making any decision about whether to acquire the product. Pleaserefer to Australian specific research disclosures and related information at https://australia.db.com/australia/content/research-information.html??Australia and New Zealand: This research is intended only for "wholesale clients" within the meaning of the AustralianCorporations Act and New Zealand Financial Advisors Act respectively.?

Additional information relative to securities, other financial products or issuers discussed in this report is available uponrequest. This report may not be reproduced, distributed or published without Deutsche Bank's prior written consent.??Copyright © 2017 Deutsche Bank AG


https://australia.db.com/australia/content/research-information.html

https://australia.db.com/australia/content/research-information.html

David Folkerts-LandauGroup Chief Economist and Global Head of Research

Raj HindochaGlobal Chief Operating Officer

Research

Michael SpencerHead of APAC Research

Global Head of Economics

Steve PollardHead of Americas Research

Global Head of Equity Research

Anthony KlarmanGlobal Head ofDebt Research

Paul ReynoldsHead of EMEA

Equity Research

Dave ClarkHead of APAC

Equity Research

Pam FinelliGlobal Head of

Equity Derivatives Research

Andreas NeubauerHead of Research - Germany

Stuart KirkHead of Thematic Research

International locations

Deutsche Bank AGDeutsche Bank PlaceLevel 16Corner of Hunter & Phillip StreetsSydney, NSW 2000AustraliaTel: (61) 2 8258 1234

Deutsche Bank AGGroße Gallusstraße 10-1460272 Frankfurt am MainGermanyTel: (49) 69 910 00

Deutsche Bank AGFiliale HongkongInternational Commerce Centre,1 Austin Road West,Kowloon,Hong KongTel: (852) 2203 8888

Deutsche Securities Inc.2-11-1 NagatachoSanno Park TowerChiyoda-ku, Tokyo 100-6171JapanTel: (81) 3 5156 6770

Deutsche Bank AG London1 Great Winchester StreetLondon EC2N 2EQUnited KingdomTel: (44) 20 7545 8000

Deutsche Bank Securities Inc.60 Wall StreetNew York, NY 10005United States of AmericaTel: (1) 212 250 2500

US ETF Insights Synthetic Equity & Index Strategy...12 April 2017 US ETF Insights North America...

Documents

Transcript of US ETF Insights Synthetic Equity & Index Strategy...12 April 2017 US ETF Insights North America...