ETF Inflows & Outflows
Performance Leaders & Laggards
Source: ETF Action; flows and performance data as of 10/12/23; performance data excludes leveraged and inverse products
Weekly ETF Reads
At DFA, ETFs Signal End of Exclusivity by Dinah Wisenberg Brin
“DFA ‘gatekeeping’ is over. Advisors who sell on access to DFA will need a new spiel.”
The funds and firms winning big as active ETFs boom by Frank Talbot
“Active ETFs have not suffered a single month of outflows over the past three years.”
Elite Wall Street Firms Are Surrendering to $7 Trillion ETF Boom by Justina Lee
“It’s on average pretty clear, at least with respect to U.S. equities, what the most advantageous structure is for taxable dollars.”
Hedge funds, family offices among those turning to Goldman Sachs ETF Accelerator by Christine Idzelis
“It is their ETF. They’re just using our infrastructure.”
Despite Big Losses, Investors Flock to Long-Term Bond ETFs by Katherine Lynch
“Investors may think a U.S. Treasury bond is somewhat benign, but that’s far from the case.”
Ethereum ETFs Fail to Match BITO’s Blockbuster Launch by Gabe Alpert
“It is a different environment for crypto, broadly, now versus 2021 when the bitcoin futures ETFs were launched.”
How an ETF is Born by Cinthia Murphy
“ETF product development is an interesting exercise that’s part art, part science.”
ETF Tweet of the Week
Last week, I highlighted an observation from Morningstar’s Ben Johnson that there are now nearly 300 brand names in the US ETF space, which represents approximately 35% of all brands in the mutual fund and ETF business. This week, Ben points out that 83% of those brands offer at least one actively managed ETF, which might surprise investors who associate the industry with only passive management. The SEC’s 2019 approval of Rule 6c-11 (better known as the “ETF Rule”) was a key catalyst as it streamlined the process of bringing new ETFs to market and allowed for additional operational efficiencies (such as the use of custom baskets). That opened the floodgates for active ETF issuers (Dimensional is “Exhibit A”).
The overall industry impact has been clear. Reuters’ Suzanne McGee notes that about 75% of the 376 new ETFs launched this year through October 6th were active. That compares with 63% last year and 36% in 2019. Brendan McCarthy, Goldman Sachs Asset Management Head of ETF Distribution, said this about the trend:“Some industry participants are playing catch-up“.
I would say 65% of industry participants are still playing catch-up, so expect this active ETF boom to continue.
See if you can spot the ETF Rule's effect here…
— Ben Johnson, CFA (@MstarBenJohnson) October 10, 2023
There are now 249 active ETF issuers and ~83% of all ETF issuers have at least one actively-managed ETF.
Source: @MorningstarInc Direct. pic.twitter.com/w3XiG3MqnH
ETF Chart of the Week
I found the below chart rather eye-opening given the current market environment, where themes have taken a backseat to other portfolio considerations. Despite the fact that thematic ETF assets are down nearly 50%(!) from their 2021 peak, the number of thematic ETFs is at an all-time high (290 products). While there have been outflows from thematic ETFs, a big chunk of that 50% asset decline is market performance-related. However, that rough performance is clearly not deterring ETF issuers from entering the category.
Source: Global X
