Data & Research September 14, 2010

RIAs Increased Average AUM Significantly

A survey conducted by Rydex|SGI's AdvisorBenchmarking of 427 registered investment adviser (RIA) firms found their average assets under management (AUM) increased by 28% from 2008 to 2009.  
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The firms, on average, increased assets from $136 million in 2008 to $174 million in 2009–the greatest increase AdvisorBenchmarking has seen in the 11 years that it has been conducting this survey.  

Perhaps the reason for this dramatic increase is that more than half of RIAs have made it their primary goal to grow their AUM.   The trend may continue, as 42% expect the number to grow another 11-20% in the next five years.   

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However, the survey did not conclude that RIAs are earning more revenue as a result of increased business.  The survey found that because expenses have increased, profit margins have largely stayed the same since 2008.  Thirty-one percent of advisers also decided to decrease their compensation and instead, chose to invest more into their business.  

“A significant part of this growth trend can be credited to advisers being prepared to take action when an opportunity presents itself,” said Maya Ivanova, research manager for AdvisorBenchmarking. “Advisers who have learned to leverage opportunity in a tough and unpredictable economy have managed to continue to grow their businesses successfully. 

As AUMs continue to grow, financial advisers are still challenged by several factors, according to the survey.  The most common ones include finding new clients (79%), government overregulation (71%), and increased investments in technology  (68%).  

 

The Markets September 14, 2010

ETF Inflows Halt in August

Exchange-traded funds posted net outflows totaling roughly $1.3 billion August, ending a six-month streak of consecutive monthly inflows, according to Morningstar Direct’s Fund Flows Update.
Reported by

U.S. ETFs closed the month with about $812 billion in total net assets, down 2.3% month-over-month.  

For the second straight month, international-stock ETFs have led all asset classes in terms of net inflows, thanks to strong demand for emerging-markets funds, Morningstar said. International-stock ETFs posted $4.4 billion in net inflows. Over the trailing three-year period, emerging-markets ETFs have accounted for more than 61% of all flows into international-stock ETFs.  

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SPDR S&P 500 SPY, the largest and most heavily traded ETF on the market, saw nearly $6.6 billion head for the exits in August, pushing total year-to-date net outflows for the fund to $19.1 billion. The tech-heavy PowerShares QQQ Trust QQQQ was a distant second in terms of highest net redemptions, after shedding about $2.1 billion last month. The iShares Russell 2000 Index IWM claimed the third spot on the largest outflows list with more than $1.6 billion in net outflows.  

Morningstar data showed iShares iBoxx $ High Yield Corporate Bond HYG and SPDR Barclays Capital High Yield Bond JNK, with inflows of $464 million and $332 million, respectively, led flows into junk bond ETFs, as investors took on more risk in search of more attractive yields in August. Short-term bond ETFs remained popular despite their unimpressive yields.   

Precious-metals ETFs, bolstered by inflows of $827 million into SPDR Gold Shares GLD, were the most popular ETFs in the commodities asset class in August.  

 

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