ETFs
US investors are turning to ETFs rather than single stocks and mutual funds
Key takeaways
- U.S. investors are increasingly turning to exchange-traded funds (ETFs) rather than single stocks, according to data from analysts at Bank of America (BofA) Securities and Brown Brothers Harriman.
- In March, the ETF industry reached another milestone with $12.7 billion in assets.
- Among ETF options, investors want to increase their exposure to actively managed funds, cryptocurrencies and commodities.
Exchange Traded Funds (ETFs) continues to gain popularity among investors, with the sector hitting a record assets under management (AUM) of $12.7 billion in March, according to a report from Brown Brothers Harriman (BBH). Consistent with this trend, there are growing signs that U.S. investors are starting to favor ETFs over ETFs. single stock investment.
ETF investing outpaces individual stocks
In its latest weekly equity client flow trends report on Tuesday, BofA Securities said that year to date inflows into ETFs have outpaced those into individual stocks.
BofA said its clients purchased ETFs for the fourth consecutive week across all major strategy styles: growth investing, value investment, and mixed. Investors were active across a range of sectors, seeing net purchases of ETFs in eight of 11 industry sectors, led by discretionary ETFs, which represented the fifth largest inflow since 2017, when BofA began collecting funds. such data. Meanwhile, energy ETFs saw the largest outflows for a second straight week, perhaps a sign that investors were actively managing their ETF portfolios.
Communication services have been one of the most popular sectors for ETFs, with net inflows in 28 of the last 29 weeks, alongside technology, with inflows in nine out of 11 weeks. Investors are also using ETFs to access a Chinese stock market rebound, with recent data showing strong capital inflows from February this year.
The launch of Bitcoin Spot ETF in January, fund managers were able to access the leading digital currency in a vehicle approved by the Securities and Exchange Commission. Investors paid $12 billion in a mix of spot bitcoin ETFs in the first quarter.
ETF Investors Plan to Increase Their Exposure to ETFs
BBH’s 2024 Global ETF Survey indicates that actively managed ETFs are becoming a popular investment avenue.
The company surveyed 325 ETF investors in the United States, Europe and Greater China, 40% of whom manage more than $1 billion in assets and 24% of whom have more than 50% of their portfolio in ETF.
The survey showed that 82% of global investors planned to increase their allocation to AND F over the next 12 months. However, the trend was more pronounced among US investors, with 97% looking to increase their ETF investments over the same period. The majority also said they planned to increase their exposure to Actively managed ETFs and to increase the number of transmitters they use.
Over the next year, investors were very optimistic about cryptocurrencies. alternatives, and actions. When asked about the minimum level of assets under management required by US investors in an ETF, the largest funds won: almost a third said between $51 million and $100 million, while 43% said between $101 and $250 million.
Mutual funds also showed signs of losing ground in the study, as 37% of ETF investors surveyed said they planned to use actively managed ETFs in their portfolios as a substitute or replacement for mutual funds. investment assets – and they have already changed their allocations accordingly.
Another sign that ETFs are hot is the SPDR S&P 500 ETF Trust (TO SPY) reached a record level for assets under management at the end of February, while the stock market rally induced by artificial intelligence (AI) at Nvidia (NVDA) and other big tech companies are creating a desire for exposure to the so-called Magnificent Sevenof which Nvidia is a component.