Record inflows went into global exchange-traded funds in 2021 given the lower costs and higher returns they offer, Reuters reported.
Inflows for the year stood at $1.22 trillion, reflecting a 71% increase from the previous year. Net assets surged to $9.94 trillion, but still remained below assets under management of mutual funds up with $43.8 trillion.
The biggest inflows were recorded in the United States with $901 billion, followed by exchange-traded funds in Europe with $190 billion, and Asian ETFs with $88 billion. There were 1,334 new funds launched during the year, over double the 2020 figure.
Analysts attribute the growth to the lower costs and higher returns provided in the ETF market, along with the transparency versus the more traditional mutual funds. The sector also grew in line with the emergence of crypto and ESG-linked funds.
Major ETFs such as the Vanguard 500 Index Fund and Vanguard Total Stock Market Index Fund each recorded over $40 billion in net buying, while the SPDR S&P 500 ETF Trust scored $37.55 billion worth of inflows.
Analysts noted that active asset managers are now looking at ETFs for long-term exposure on “megatrends” core to their portfolios. VOO is down 0.32%, VTI down 0.38%, and SPY down 0.34%.