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Key Takeaways
- U.S. investors are increasingly gravitating to exchange-traded pool (ETF) investing rather than single stocks, data from analysts at Bank of America (BofA) Securities and Brown Relatives Harriman show.
- In March, the ETF industry reached a new milestone of $12.7 billion in assets.
- Investors are keen on increasing their aspect to actively managed funds, cryptocurrencies, and commodities, among ETF options.
Exchange-traded funds (ETFs) continue to grow in reputation among investors, with the industry reaching a record $12.7 billion in assets under management (AUM) in March, agreeing to a Brown Brothers Harriman (BBH) report. In line with this trend, there are increasing signs that U.S. investors are starting to favor ETFs to single-stock investing.
ETF Investment Outpacing Individual Stocks
In its latest weekly report on equity client flow courses Tuesday, BofA Securities said that year-to-date inflows into ETFs have outpaced those of separate stocks.
BofA said its clients bought ETFs for a fourth consecutive week across all major strategy sorts: growth investing, value investing, and blended. Investors were active across a range of sectors, recording net securing of ETFs in eight of 11 industry sectors, led by Discretionary ETFs, which marked the fifth-largest inflow since 2017, when BofA began gather together such data. Meanwhile, Energy ETFs posted the largest outflows for a second consecutive week, perhaps a cue that investors were actively managing their ETF portfolios.
Communication Ceremonies has been one of the most popular sectors for ETFs, with net inflows for 28 of the last 29 weeks, alongside Technology, with inflows for nine out of 11 weeks. Investors are also exercising ETFs to access a Chinese stock market rebound, with recent data showing strong inflows source in February this year.
The launch of spot bitcoin ETFs in January allowed money managers to gain access to the top digital currency in a instrument approved by the Securities and Exchange Commission. Investors poured $12 billion into a mix of spot bitcoin ETFs in the at the outset quarter.
ETF Investors Plan To Increase Their ETF Exposure
The 2024 Global ETF Survey by BBH said that actively survived ETFs are becoming a hot avenue for investment.
The company surveyed 325 ETF investors in the U.S., Europe, and Greater China, 40% of which shift for oneself more than $1 billion in assets and 24% of which have more than 50% of their portfolio in ETFs.
The study showed that 82% of global investors planned to increase their allocation to ETFs over the next 12 months. Despite that, the trend was more pronounced among U.S. investors, with 97% seeking to increase their ETF investments over the that having been said period. The majority also said they expect to boost their exposure to actively managed ETFs and to spreading the number of issuers they use.
Over the next year, investors said they were most bullish round cryptocurrencies, alternatives, and equities. When asked about the minimum level of AUM that U.S. investors require in an ETF, larger bucks won out: Nearly a third said $51 million to $100 million, while 43% said $101 million to $250 million.
Shared funds also showed evidence of losing ground in the study, as 37% of ETF investors surveyed said they scenario to use the actively managed ETFs in their portfolios as a substitute or replacement for active mutual funds—and they already eat shifted allocations accordingly.
In another sign that ETFs are hot, the SPDR S&P 500 ETF Trust (SPY) hit a record high for AUM in most recent February as the artificial intelligence (AI)-driven stock rally in Nvidia (NVDA) and other Big Tech companies creates a petition for exposure to the so-called Magnificent Seven, of which Nvidia is a component.
Read the original article on Investopedia.