Post-Financial Crisis: Perfect Environment for ETF Growth

Oliver noted that the sudden popularity may be attributed to the rising preference for passive investment vehicles, which covers both index-based mutual funds and ETFs. Passive investments began to take a firm lead ahead of active strategies from 2011, and after 2014, active funds experienced net outflows. Many dissatisfied investors have grown weary of the high costs and underperformance of actively managed strategies, opting to just passively track the benchmarks instead.

Additionally, the ETF investment wrapper has also benefited from greater popularity following the financial crisis for structural reasons, especially for fixed-income ETFs. ETFs provide intra-day liquidity, a generally diversified portfolio, low management fees, full transparency and are exchange cleared.

“To bring back my point that ETFs have not been a flow revolution, but an adoption of new technology in the same existing markets,” Oliver said.

For more information on the ETF industry, visit our ETF performance reports category.