How Investors Turned to ETFs for Liquidity and Market Access in 2020

By Matthew J Bartolini, CFA, Head of SPDR Americas Research; Colin J Ireland, CFA, Sales Execution and Institutional Strategy

Investors seeking to quickly reposition portfolios in 2020’s historically volatile market were limited by their ability to source liquidity. To meet their liquidity needs, investors of all types gravitated toward the centralized exchange trading and transparency of the ETF structure — creating deeper pools of liquidity for constrained markets and a much-needed buffer for the underlying securities. Analyzing ETFs’ record inflows and trading volumes provides a lens through which to consider how the use of ETFs will continue to increase in the future.