In the final episode of ETF Prime for 2023, host Nate Geraci speaks with a pair of individuals discussing several different ETF-related topics. His guests include VettaFi’s Todd Rosenbluth who shares his top equity ETF stories from 2023 and discusses how they will fare in 2024. Geraci also speaks with State Street’s Matt Bartolini to recap ETF flows and discuss three potential missed opportunities.
TMX’s Agreement to Acquire VettaFi
To open the podcast this week, VettaFi’s head of research, Todd Rosenbluth, joined the show to discuss equity ETF stories from 2023, and if Rosenbluth believes that these trends will continue in 2024. Before getting into this discussion, Geraci highlighted and sent congratulations regarding the big news from last week, which was that TMX Group announced an agreement to acquire VettaFi.
“We are really excited about it, and it’s been a nice journey,” Rosenbluth said.
Rosenbluth then shared all that VettaFi has accomplished in such a short time as a company. He highlighted the success of the Exchange Conference and shared how he expects the 2024 version of the conference to be just as successful. Rosenbluth also mentioned that VettaFi hosted over 230 virtual events this year that saw more than 60,000 live advisors attend them. Additionally, he points to VettaFi’s acquisition of three companies, including the acquisition of the indexes behind popular products like ROBO and IBUY.
Equity ETFs in 2023
The conversation then shifts gears when the pair begins to discuss some of the biggest ETF equity stories that were seen in 2023. Geraci first mentions a piece that Rosenbluth wrote recently where he highlighted some of the top stories surrounding equity ETFs this year. In the piece, Rosenbluth highlighted active management as one of the top stories and mentioned that VettaFi was one of the first firms to point out this as an area to watch. Geraci then asks for Rosenbluth’s thoughts on active management overall in 2023.
“Active ETFs, and in particular active equity ETFs, punched above their weight,” Rosenbluth said.
He then points to Capital Group, Dimensional Funds, and JPMorgan as firms that have seen an influx of flows this year due to the rise of active products. Rosenbluth then shares that he has seen active ETFs begin to take some market share in 2023, and he expects that these products will continue to do so in 2024. Specifically, he highlights that he thinks that more individuals will continue to be interested in this style of product.
Covered Calls ETFs
The duo then moves the conversation to covered call ETFs because of their part in the rise of active ETFs in 2023. Geraci gives his take on these styles of ETFs and shares that he thinks that the space is a bubble because of the number of copycat products that have come to market in recent years. Geraci then asks Rosenbluth to give his take on what this space might look like moving forward.
“I think there is room for more than one successful product from more than one asset manager,” Rosenbluth said.
However, Rosenbluth believes we will have to wait until the end of 2024 to see if these products have continued to gain traction. Geraci then continues to go in-depth, sharing why these products ultimately feel like a fad to him. Rosenbluth then shares that despite Geraci’s feelings towards these products, funds like the JPMorgan Equity Premium Income ETF (JEPI) have continued to see flows in 2023 because advisors want to generate income for their clients given the market’s current condition.
In addition, the duo explores growth and quality factor ETFs, the financial sector, and Rosenbluth makes two predictions for 2024.
ETF Flows in 2023
To close the podcast this week, Geraci has a conversation with Matt Bartolini, the Head of SPDR Americas Research at State Street Global Advisors. Geraci first mentions that State Street currently offers about 140 ETFs and has nearly $1.2 trillion in assets. Geraci highlights that he feels there is no better person in the industry than Bartolini to give his overall take on ETF flows this year. Bartolini then joined the conversation himself and highlighted that the industry currently has seen $546 billion in overall flows.
“That would be the fourth consecutive year that ETFs have surpassed $500 billion of flows in a calendar year,” Bartolini said.
Bartolini also mentions that it is the third most flows that the industry has seen all time and highlights that on the outside looking in, it was another strong year of flows for 2023. He then says that when you dig deeper underneath the surface, most of the money has only flown into two mutually exclusive groups. He then points to low-cost ETFs and active ETFs as products that have seen a significant uptick in their flows in 2023.
To close their conversation, the pair continued to discuss their take on ETF Flows this year, and Bartolini shared three opportunities investors may have missed.
Listen to the entire episode of ETF Prime Featuring Todd Rosenbluth and Matt Bartolini:
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