Finding out who’s buying what ETFs can be a challenge – but the answer can be instructive
Who’s buying which ETFs? The answer to that question can be useful, according to a report on ETF.com.
“If you’re an ETF issuer, you’d certainly like to know who’s been buying your products,” David Nadig, director of exchange-traded funds for FactSet, wrote for ETF.com. “If you’re a hedge fund, you might be looking for signals in the patterns of other investors’ trades. If you’re an institutional investor, you might be trying to see if your allocations were representative or contrarian. As an individual investor or advisor, you might take comfort in seeing big endowments in a fund you’re interested in.”
But it can be difficult to know who has ownership of every share of an ETF, Nadig wrote. Even the Depository Trust Company, which holds ownership records of all ETFs and stocks in the U.S., doesn’t know which funds an individual investor owns.
“Instead, it just knows that a certain number of shares are sitting at Charles Schwab or Etrade, and from there, it’s that custodian’s responsibility to maintain the individual ownership records,” Nadig wrote.
However, there are ways of finding out at least some of that information, Nadig reported. Large institutional investors are required to make quarterly filings with the SEC, and mutual funds have to disclose their holdings quarterly as well.
“It turns out that all those reports rolled together can explain more than half of the $2.2 trillion in the U.S.-listed ETFs,” Nadig stated.
It can be instructive to look at the kinds of ETFs different investors use, Nadig wrote. Advisors and wealth managers, unsurprisingly, take big positions in growth and value with ETFs like the SPDR S&P 500 ETF Trust and the iShares Core US Aggregate Bond ETF. Brokers tend to favor more liquid and speculative ETFs. And many hedge funds take big positions in gold, gold miners and high-yield bond funds, according to Nadig.
“All ETFs are not created equal,” he wrote. “Different kinds of investors have very different needs.”
Related stories:
High times for global ETFs reported
How can you spot a bad ETF?
“If you’re an ETF issuer, you’d certainly like to know who’s been buying your products,” David Nadig, director of exchange-traded funds for FactSet, wrote for ETF.com. “If you’re a hedge fund, you might be looking for signals in the patterns of other investors’ trades. If you’re an institutional investor, you might be trying to see if your allocations were representative or contrarian. As an individual investor or advisor, you might take comfort in seeing big endowments in a fund you’re interested in.”
But it can be difficult to know who has ownership of every share of an ETF, Nadig wrote. Even the Depository Trust Company, which holds ownership records of all ETFs and stocks in the U.S., doesn’t know which funds an individual investor owns.
“Instead, it just knows that a certain number of shares are sitting at Charles Schwab or Etrade, and from there, it’s that custodian’s responsibility to maintain the individual ownership records,” Nadig wrote.
However, there are ways of finding out at least some of that information, Nadig reported. Large institutional investors are required to make quarterly filings with the SEC, and mutual funds have to disclose their holdings quarterly as well.
“It turns out that all those reports rolled together can explain more than half of the $2.2 trillion in the U.S.-listed ETFs,” Nadig stated.
It can be instructive to look at the kinds of ETFs different investors use, Nadig wrote. Advisors and wealth managers, unsurprisingly, take big positions in growth and value with ETFs like the SPDR S&P 500 ETF Trust and the iShares Core US Aggregate Bond ETF. Brokers tend to favor more liquid and speculative ETFs. And many hedge funds take big positions in gold, gold miners and high-yield bond funds, according to Nadig.
“All ETFs are not created equal,” he wrote. “Different kinds of investors have very different needs.”
Related stories:
High times for global ETFs reported
How can you spot a bad ETF?
