The Inside ETFs conference in Hollywood, Florida kicked off on Sunday as over 2,300 financial advisors, institutional investors, hedge funds, and more discussed the latest and greatest in the ever-growing ETF space. As the investment vehicle matures, it must also change with the times of the current economic landscape.
ETF Trends CEO Tom Lydon joined CNBC’s Bob Pisani on CNBC’s “ETF Edge” show on Monday to discuss opportunities and the latest trends going on in an ETF industry that doesn’t appear to be slowing down even amid the more volatile market conditions of today.
Investors are Focusing on Price
Even with a December 2018 to forget, ETFs continued to amass assets to the tune of over $51 billion while mutual fund flows suffered. Mutual funds, bond and equity funds, in December lost a record $152 billion.
One would assume that outflows from U.S. equities in 2018 would also be evident in ETFs that have been purchasing the downtrodden shares in the three major indexes. However, that hasn’t been the case as ETFs received $314 billion worth of inflows despite a challenging 2018–a drop from the $466 billion the previous year, but given the challenges of 2018, an impressive figure nonetheless.
The capital flows into ETFs are continuing thus far in 2019 as data from XTF.com shows that ETF assets have risen by 7 percent year-to-date or $237 billion.
The primary motivator for investors in 2019 has been price. Regardless of whether an ETF uses an active or passive strategy, investors are seeking out low-cost solutions.
“In December, we saw $50 billion of new assets coming into ETFs when $120 billion came out of mutual funds,” said Lydon. “So people are continuing to be more comfortable with ETFs–more money going into the factor strategies and multi-factor strategies as opposed to pure beta, low-cost cap-weighted strategies.”
“It’s all price,” added Lydon.