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ETFs Are Eating the World

Observant1
edited January 15 in Fund Discussions
"Exchange-traded funds, which have existed for just 35 years,
are booming at the expense of traditional mutual funds.
More than 1,000 ETFs launched in the U.S. last year with the industry’s assets
reaching $13.5 trillion, according to FactSet. December saw record inflows and launches."

"Their invention was like dropping a new apex predator into the investment habitat—an unfair fight.
A cumulative $3 trillion flowed out of traditional mutual funds between 2015 and 2024 with a similar sum
moving to ETFs, according to the Investment Company Institute."

"Yet there are now more ETFs than stocks.
Given the choice between making money from genuine usefulness or gimmicks,
most new ones resort to the latter. It’s a jungle out there."

https://trk.wsj.com/view/6965296053e1c001a9787e7bpxh6q.a2j1/f62a2c24

Comments

  • larryB
    I am joking of course but for those inpatient and obsessive investors, not having to wait till late afternoon to see how your stuff did is a key attraction to going ETF vs Mutual Fund.
  • racqueteer
    larryB said:

    I am joking of course but for those inpatient and obsessive investors, not having to wait till late afternoon to see how your stuff did is a key attraction to going ETF vs Mutual Fund.

    I think that no fees are at least on par with intraday availability motivation.
  • yogibearbullyogibearbull
    I recently read that while ETFs are extremely popular with retail investors, big investors have moved on to direct- or customized- indexing. So, in 5 years, direct-indexing may be eating the world (-:)

    What's great about direct-investing? Better control and TLH.
  • MarkMark
    And TLH is?
  • Observant1
    edited January 16
    Mark said:

    And TLH is?

    Tax Loss Harvesting
  • Sven
    Lower fee has been a big driver for ETF growth. Now there are more actively managed ETFs available. Not have to paying the transaction fees is always welcoming.

    Some firms such as Dodge & Cox may offers ETFs too in the future. Other smaller firms are converting for their survival.
  • AndyJ
    edited January 16
    In my limited exploration among active etf's, about 90% of the ones I've looked into have volume that's so tiny you'd have to spend an inordinate amount of time to either fill out or sell out of a decent-size position. (And even etf's with fairly decent average volumes sometimes have periods of very low volume.)

    Remember ETF Deathwatch? It's apparently still around, much reduced from what I recall.
  • Observant1
    90% Of All Investment Products Are Crap
    https://www.mutualfundobserver.com/discuss/discussion/65108/90-of-all-investment-products-are-crap/p1
  • AndyJ
    edited January 16
    Observant1 said:

    90% Of All Investment Products Are Crap
    https://www.mutualfundobserver.com/discuss/discussion/65108/90-of-all-investment-products-are-crap/p1

    Ha! Leave it to Barry R. to tell it like it is.
  • catch22catch22
    To add: A decent report for reading and chart views.

    Fidelity 2025 'ETF' flows report, January 15.
  • linter
    a friend of mine just wrote this. makes sense to me.

    Another consideration.

    With Index ETFs "overtaking" mutual funds and individual stock picking, large cap index and sector funds, whether price weighted (the DOW30) or market cap weighted ($QQQ), are receiving automatic inputs via 401K/IRA deposits on a regular basis throughout the year.

    Forty to 60 cents of each of those dollars flows into the top 10 largest holdings regardless of current news/charts/ratings etc. So up they go in price.

    Periodic readjustments of fund components works to keep the latest and best large caps on top of that pile.

    And as those fund prices rise, the large cap premium grows.
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