While 2022 was a rocky year for markets, it was a big year for the ETF industry: ETFs took in more than $800 billion in flows last year, marking the second-best year ever for ETFs.
Within the new money entering ETFs, several trends emerged: record inflows went into fund segments, including active equity, U.S. value, and smart beta, Todd Rosenbluth, head of research at VettaFi, said during a panel on Sunday at Exchange: An ETF Experience.
Several new entrants emerged in 2022, which included Capital Group, DoubleLine, Morgan Stanley, Matthews Asia, and Neuberger Berman. And mutual fund to ETF conversions, an emerging trend in recent years, were also rampant, with conversions from Dimensional Funds, Goldman Sachs Asset Management, Harbor Capital Advisors, and JPMorgan Asset Management entering the market.
“Quite a few of these trends are continuing into this year,” Lara Crigger, Editor-in-Chief at VettaFi, said at Exchange. “I don’t think we’re going to see any slowdown in mutual fund issuers trying to carve out space for themselves in the ETF industry.”
According to Rosenbluth and Crigger, behavioral trends have also shifted among financial advisors in the past year. Notably, all the top-researched funds per VettaFi data outperformed their FactSet categories. “Performance was a really big factor in terms of what people engage with, what drives research,” Crigger said.
With that in mind, naturally, financial advisors researched and engaged the most with alternative strategies, particularly managed futures, in 2022.
“Managed futures, of course, were the best performing category,” Crigger said, pointing to the iMGP DBi Managed Futures Strategy ETF (DBMF), which surged in popularity last year and took in considerable flows.
Advisors also looked to ultra-short duration Treasuries ETFs as they looked to boost protection and minimize risk last year. Options-based ETFs that could provide income were also top of mind, and tactical plays, especially in defense and real estate, surged in interest.
Other major behavioral trends observed last year include commodities seeing a massive research spike with the onset of the Russia-Ukraine war and peaking inflation, investors returning to fixed income as rates rose, and the strong dollar bringing international equities into clear focus.
For more coverage of Exchange 2023, please visit VettaFi | ETF Trends.