There is an emerging and overlooked user group of ETFs: mutual funds.
ETFs have been seeing money move in the door while investors flee U.S. stock mutual funds. Also driving the inflows are mutual fund purchases of ETFs to implement their investment strategies.
“For the first nine months of 2012 investors have taken $70 billion from equity mutual funds but have added $85 billion to equity ETFs: in other words they have increased their exposure to equities,” Jeffrey Yale Rubin and Kevin Pleines at Birinyi Associates, Inc. said in a report. “And since March 2009 there has been a cumulative net outflow from equity mutual funds of – $221 billion but an inflow of $270 billion to equity ETFs.” [ETF Performance Beats Active Management]
A recent WSJ report cited statistics from the Investment Company Institute finding that “since the market low in March 2009, investors have yanked a net $138 billion from mutual funds and exchange-traded funds that invest in U.S. stocks.” [ETFs Taking 57% of Mutual Fund Flows This Year]