This year, funds flowing into U.S. exchange-traded funds (ETFs) reached $437 billion, setting a record for the largest amount ever. Despite increasing market volatility due to the global trade war and interest rate uncertainty, investors are directing funds into ETFs, viewing them as a safe investment.
The Wall Street Journal (WSJ) reported on the 25th (local time), citing a report from the investment research firm BetaFi, that the influx of funds into ETFs is interpreted as a result of investor sentiment using market declines as buying opportunities, in addition to a structural flow of assets moving from mutual funds to ETFs. Todd Rosenbluth, head of research at BetaFi, noted, "Investors are accepting the sell-off as a buying opportunity."
Among ETFs, the Vanguard Standard & Poor's (S&P) 500 ETF (VOO) recorded a net inflow of $65 billion, emerging as the largest single-item ETF in the world. Equity ETFs remain in high demand, and fixed-income ETFs are also gaining popularity due to defensive investment demand. BlackRock's 0-3 month U.S. Treasury ETF saw an inflow of $17 billion, marking the second-largest amount this year.
The popularity of ETFs is also strong among retirees. JP Morgan's active stock ETF is popular enough to be referred to as "the candy of the baby boom generation" among investors seeking stable dividends and revenue. This product accounts for about 30% of the ETF funds inflow this year, originating from active funds.
Existing mutual fund managers are also speeding up their transition to ETFs. Fidelity is actively expanding its ETF lineup, and several fund managers have submitted applications to the U.S. Securities and Exchange Commission (SEC) to register existing mutual funds in ETF class form. Upon approval, the expansion of the ETF market is expected to accelerate further.