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(1:00) – Breaking Down ETF Fund Flows: Are Investors Protecting Themselves Against Inflation?
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(6:20) – Why Are Mutual Funds Converting To ETFs?
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(9:30) – Will Investors Finally Get A Bitcoin ETF In 2022?
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(14:15) – Will Cathie Wood and Ark Invest Bounce Back Next Year?
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(19:25) – The Best ETFs Launched In 2021
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(26:45) – Top ETF Picks Heading Into 2022
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In this episode of ETF Spotlight, I speak with Eric Balchunas, Senior ETF Analyst at Bloomberg Intelligence, and host of the Trillions podcast. We discuss the top ETF stories of 2021 and the outlook for 2022.
2021 is turning out to be a banner year for ETF asset gathering, with year-to-date inflows for U.S. listed ETFs close to $900 billion, and global ETFs pulling in more than $1 trillion. Many investors now prefer ETFs since they are more tax-efficient and usually cheaper than mutual funds.
Most of the new money has gone into low-cost U.S. equity funds, thanks mainly to excellent performance by stocks, with both the S&P 500
SPY
and the Nasdaq 100
QQQ
up more than 25% year-to-date. Within fixed income, investors preferred inflation-protected, and shorter duration products given inflationary concerns.
Dimensional Fund Advisors became the 11
th
biggest ETF issuer after converting some of its mutual funds into ETFs this year. Investors’ preference for the ETF wrapper is evident from the fact that mutual funds attracted just about $45 billion inflow this year. Bloomberg Intelligence estimates that $1 trillion in conversions will take place over the next 10 years.
ARK was the biggest story of 2020 as investors poured money into its ETFs that had delivered phenomenal performance. Their flagship fund–the ARK Innovation ETF
ARKK
–is down about 22% this year. Tesla
TSLA
, its top holding has done well, but many others are down significantly. While inflows have slowed this year, ARK investors are not rushing for exits.
The ProShares Bitcoin Strategy ETF
BITO
had a very successful debut, thanks mainly to the immense pent-up demand, but the two that came just a few days later have struggled to gather assets. Will we see a spot bitcoin ETF next year?
2021 has been a record year for ETF launches too with about 450 new products making their debut. Newer products tend to more complex, focused on niche themes or derivatives based, as it is almost impossible to compete with ultra-cheap beta products. Eric’s favorite new ETFs are the Engine No. 1 Transform 500 ETF
VOTE
and the Roundhill Ball Metaverse ETF
META
.
The three ETFs Eric will watch in 2022 are the Global X Copper Miners ETF
COPX
, the Global X Blockchain and Bitcoin Strategy ETF
BITS
and the iShares MSCI USA Min Vol Factor ETF
USMV
.
Tune in to the podcast to learn more.
Make sure to be on the lookout for the next edition of ETF Spotlight and also make sure to subscribe! If you have any comments or questions, please email [email protected]
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