2021 – a year of growth and innovation for US ETFs

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2021 has been an extraordinary year for the US ETF industry with huge growth in assets, combined with a wave of innovation in products. 

Latest figures to end August from ETFGI sees ETF global assets reaching a record USD9.73 trillion, with record year to date of inflows which have beaten the previous record set in 2017. 

And the types of ETFs that those assets are flowing into have changed as well. This vibrant industry has enjoyed growth in a wide range of types of ETFs, moving out of the traditional passive home and now offering access to investment based on everything from thematic investment trends to active investment management. 

Headlines on ETFs have focused on two key areas this year: cryptocurrencies and ESG. Cryptocurrency-based products, not included in this US ETF line-up, have raised conversation and debate rather than assets as yet, but flourished elsewhere in the world, with products across Canada and Europe. The US industry awaits the approval of the first crypto ETP, having made close to 20 applications and recent comment from SEC Chairman Gensler seems to imply it will be a bitcoin futures-based product. 

Speaking at the 2021 US ETF awards event, James Seyffart, ETF Research Analyst at Bloomberg Intelligence, went further, predicting that October 2021 will see the first launch of a bitcoin futures-based ETP in the US, from ProShares, a firm that already has similar products north of the border in Canada. 

Time will tell but crypto has had a companion in its dominance of ETF chat over this exciting year. ESG has also dominated conversations, perhaps still more so in Europe, but it is continuing to drive investor demand in the US and according to the annual stewardship survey from Sage Advisory Services, there is a growing commitment from ETF issuers to perform their fiduciary duties on behalf of ETF investors. 

And this year was the year when apparently everyone wanted to be an ETF. Mutual fund conversions to ETFs in the US have swelled those ETF asset numbers by billions of dollars as a range of firms discovered the joys of the transparency and liquidity of the ETF structure. 

These new ETFs are either mirroring or replacing their mutual fund cousins, and in an interview with ETF Express, Bloomberg’s own Ben Morris commented that it was fascinating at the highest level to see this development of acceptance of the ETF structure, against two or three years ago, when, he says, there was more skepticism around ETFs. 

Recent months have seen nothing but steady growth for this exciting industry which democratises investment, bringing easy and low-cost access to investment themes, whether obscure or everyday. 

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Beverly Chandler
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