ETF Industry Is Positioning to Break $10 Trillion in AUM | ETF Trends

The exchange traded fund industry has enjoyed another phenomenal year, bringing in more than $1 trillion in new inflows and knocking on $10 trillion in total assets under management, despite COVID-19 risks that threaten global growth.

According to ETFGI data, net global inflows into ETFs hit $1.14 trillion as of the end of November, higher than the previous record annual inflow of $762.8 billion gathered for the whole of 2020, the Financial Times reports.

The latest inflows brought total global ETF assets under management to $9.92 trillion at the end of the month, putting the industry within the $10 trillion mark for the first time in December if the inflows keep up.

Industry observers are optimistic that the ETF universe could break the watershed mark, as previous Decembers have often provided some of the strongest monthly inflows on record, especially when the U.S. equity market has rallied toward the end of the year.

“As well as record inflows for ETFs listed in both the US and Europe, we have seen record inflows in newer categories such as actively managed ETFs and with environmental, social and governance [ESG] ETFs. These are promising areas for future growth as ETFs penetrate deeper into financial markets worldwide,” Deborah Fuhr, founder of ETFGI, told the Financial Times.

Active strategies are also gaining momentum. Actively managed ETFs have brought in net inflows of $126 billion over the first 11 months of 2021, compared to the $91.1 billion for all of last year.

The socially responsible investment theme continues to resonate with investors. ESG-focused ETFs added $146.8 billion after 2020’s record annual inflows of $86.9 billion.

Salim Ramji, global head of iShares and index investments at BlackRock, attributed the growth of commission-free trading for ETFs on digital investment platforms to the accelerated adoption of ETFs as an investment vehicle.

“Hundreds of millions of people globally can now access ETFs commission-free across major investment platforms in over a dozen countries, often with a few taps on a smartphone,” Ramji told the FT.

Many have expressed belief that the stay-at-home mentality during the ongoing coronavirus pandemic has also contributed to the increased market participation rates and adoption of easy-to-use trading tools like ETFs. Additionally, more institutional investors and money managers are utilizing the cheap ETFs as a go-to tool to access broad swathes of the global markets.

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