On Wednesday, ETF Trends CIO and Director of Research Dave Nadig was on hand for the TD Ameritrade Network to discuss the record year for ETFs and what to expect next year with host Nicole Petallides.
Investors indeed poured their money right into ETFs this past year, and it’s important to take stock of what took place. With things like BITO, JETS, and more hot trends from throughout the year, Nadig points out how any time there is a bit of a crisis like increased volatility or a differing performance of asset classes than expected; it’s almost always good news for ETFs as a class.
So much money came into the ETF market, and it went heavily into equities. About 60% of the money went into equities of some variety, most into domestic equities. This is part of why the market has just continued to grind higher. Nadig adds, “Even in those periods of volatility that we had, I don’t see much changing as we look into next year.”
Given how the funds have really just been climbing over the years, there really isn’t much need to think there will be a dramatic shift backward. 2021 has been the best year for ETFs, with the most launches ever in a given year.
𝟐𝟎𝟐𝟏 𝐘𝐞𝐚𝐫 𝐢𝐧 𝐑𝐞𝐯𝐢𝐞𝐰: ETFs 📊@DaveNadig recaps the year that was in ETFs with @NPetallides, then provides her with an outlook for funds and trends to watch in 2022: https://t.co/4AMNyTnZp7
— TD Ameritrade Network (@TDANetwork) December 21, 2021
What To Do In 2022
As far as what may be of interest going into 2022, Nadig points out thematic, which were huge this year. Thematics, referring to any fund not sticking to a specific sector but attempting to group stocks together based on things seen in headlines. A lot of that money went into areas such as thematic tech, referring to things such as innovation. ARK Invest and ARKK, in particular, made up a big part of that story and took a bit of a downturn later on in the year.
The other big theme of the year was ESG. Areas such as clean energy, finding ways to profit off attempts to deal with climate change, and other areas concerning social and governance were all big winners this year. This will probably continue into next year as well.
Additionally, as Nadig points out, “I think we’re going to see a lot more active managers coming to the fray. These thematic funds that I’m expecting to see generate a lot of interest and assets – I don’t think they’re just going to be plain vanilla index funds. I think we’re going to see a lot of active thematic. They’re going to come from small RAAs and large traditional active managers. I think it’s going to be an exciting year.”
Regarding the bitcoin futures ETF launches that suddenly emerged late this year, the appetite for those funds may continue to get some assets. Still, it will be more interesting to see if they get any regulatory movement.
Nadig adds, “I think there’s going to be a lot of interest in crypto. There’s obviously going to be a lot of media frenzy around crypto, almost regardless of whether it goes up a lot or down a lot. I think one thing we can be absolutely sure of is that the crypto market is not going to be boring in 2022.”