Date of Award

5-2026

Document Type

Thesis

Degree Name

Bachelor of Arts (BA)

Department

Social Sciences

First Advisor

Ingram, Marcus

Area of Concentration

Financial Economics

Abstract

This thesis examines the rapid growth and structural transformation of exchange-traded funds within the United States asset management industry. Since the launch of the first ETF in 1993, ETFs have evolved from a niche financial innovation into one of the most influential investment vehicles in U.S. financial markets, attracting trillions of dollars in assets under management and increasingly competing with traditional mutual funds. The study explores the historical development of ETFs, the structural differences between ETFs and mutual funds, and the competitive dynamics that have contributed to the expansion of ETFs within asset management. The analysis focuses on the economic and strategic factors driving ETF growth, including passive investing, cost efficiency, liquidity, transparency, and financial innovation. Particular attention is given to leading asset managers such as BlackRock, Vanguard, and State Street Global Advisors, whose scale and technological advantages have contributed to a highly concentrated ETF market. Using frameworks such as Porter’s Five Forces, the Structure-Conduct-Performance (SCP) model, behavioral finance, and the Efficient Market Hypothesis, this thesis evaluates how competition, investor behavior, and market efficiency have influenced the adoption of ETFs in the United States. Additionally, the thesis examines emerging trends such as active ETFs, ESG investing, direct indexing, and fintech-driven investment platforms, while also addressing systemic risks and regulatory concerns associated with market concentration. Ultimately, this thesis argues that ETFs represent more than simply an alternative investment product; they reflect a broader structural shift occurring within the U.S. asset management industry as investors increasingly favor low-cost, transparent, and flexible investment vehicles over traditional mutual fund structures.

Rights

The author has granted New College of Florida the nonexclusive right to archive, make accessible, and distribute for educational purposes this work in whole or in part in all forms of media, now or hereafter known. The copyright of this work remains with the author.

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