All over the world, exchange traded funds (ETFs) are enjoying investor interest.
Canadian ETFs are seeing record inflows of cash while their mutual funds are experiencing record sell offs, according to Investment Executive. It’s a situation not unlike our own in the United States.
ETF guru Deborah Fuhr expects assets in ETFs to hit $1 trillion by 2009, and double that by 2011, reports Matt Turner for Wealth Bulletin.
In light of a tumultuous global economy, people are also exploring Singapore’s ETFs, which provide a very diversified portfolio, reports Desmond Wong of Channel NewsAsia. Exchange traded funds in emerging markets are becoming ever more popular as a haven for those seeking diversity and potential for growth. Traditionally, they’ve been more popular in developed markets.
ETFs hold assets such as stocks or bonds which allow investors to spread levels of risk and exposure to any one particular holding. This proves to be an enticing incentive to attract more investors in a time of economic volatility.
But it should be noted that because of their diversified nature, ETFs are less responsive to market fluctuations in the short-term. This can appeal more to long-term investors seeking more liquidity, but in truth, they work for any type of investor and can fit into any investment strategy.
Investors are also finding ways to make money, even in down market. There are a number of long and short ETFs available, and they’re learning how to incorporate them into their overall strategy, making them especially popular in the recent market downturn.
Investors have dumped $74 billion out of mutual funds in all categories last month alone, says Trang Ho for Investor’s Business Daily. Year-to-date, a net $199.37 billion has come out of mutual funds and a net $83.6 billion has gone into ETFs.
As more and more investors flock to exchange traded funds, it is no wonder that about $400 billion in net cash flow has found its way into ETFs since 2005, writes Murray Coleman for Index Universe.