A record surge of cash has moved into exchange-traded funds, prompting asset managers to create new trading strategies, according to a report by The Wall Street Journal on Sunday.
The annual inflows into ETFs globally passed the $1trillion mark for the first time at the end of November, topping last year’s amount of $735.7 billion.
That inflow of money has pushed global ETF assets to around $9.5 trillion, more than double where the sector reached at the end of 2018.
Most of the new inflows have gone into low-cost US funds that track indexes operated by Vanguard Group, BlackRock Inc, and State Street Corp that controls more than three quarters of US ETF assets.
Rich Powers, head of ETF at Vanguard, stated that the surge in ETFs is a historical precedent where equity markets and investors are making their way to index products.
Asset managers are taking a look at actively managed funds in search of an unfilled niche not fully dominated by the industry’s giants.