Advisers' favorite ETF provider is Vanguard: survey

The Vanguard Group Inc. has edged out BlackRock Inc.’s iShares as advisers’ most trusted exchange-traded fund provider, according to a survey released by Cogent Research. State Street Global Investors Inc.’s SPDRs ranked third in the survey, the same as last year. Rydex SGI fell out of the top five and was replaced by Pacific Investment Management Co. LLC, which entered the ETF market late last year, according to Cogent. PowerShares Capital Management LLC was in fifth place, up from sixth last year. The report is based on a survey of 1,560 advisers who were asked to name the firms to which they are most loyal. Vanguard was the only ETF provider in the top five — not including Pimco —that increased market penetration among the advisers surveyed, said Meredith Lloyd Rice, senior project director at Cogent. Vanguard’s market penetration increased to 42%, from 37% last year. However, iShares still has the highest market penetration at 87%, down from 90% last year, according to Cogent. The one area where Vanguard didn’t beat its peers was in its range of products. In that area iShares was the top provider, according to the report. Rydex’s fall in the rankings may be attributable to the fact advisers surveyed were less likely to mention the firm — without being prompted — as an ETF provider that they would consider using. “We asked how likely advisers would name, unaided, an ETF provider as a company they would consider using,” said John Meunier, a principal at Cogent. Four percent of advisers surveyed named Rydex, compared with 6% last year. Rydex’s ranking in advertising awareness fell, with only 12% of the respondents saying that they saw the firm’s ads last year, down from 20% last year. “Since the beginning of 2009, we have seen our exchange-traded-product assets grow by approximately 31%, from $4.2 billion in assets to approximately $5.5 billion in assets,” said Rydex spokeswoman Cassandra Z. Péan. “We've seen positive net sales for our 28 exchange-traded products year-to-date and continue to see significant interest and positive feedback on our ETF line, both at the financial adviser and institutional investor level.” Mr. Meunier said that it isn’t surprising to see Pimco among the top five, given the fanfare surrounding its entrance into the ETF arena. Pimco’s first ETF offering was the actively managed Enhanced Short Maturity Strategy Fund Ticker:(MINT), in December. The fund had $517.7 million in assets as of Aug. 31, according to Morningstar Inc.