You have probably heard of exchange-traded funds (or ETFs, in abbreviated form) are becoming increasingly popular.
For those who are not familiar with ETFs. What is ETF? According to Fidelity, ETF is a basket of securities that you can buy or sell through a brokerage firm on a stock exchange. ETFs are offered on virtually every conceivable asset class from traditional investments to so-called alternative assets like commodities or currencies. In addition, innovative ETF structures allow investors to short markets, to gain leverage, and to avoid short-term capital gains taxes. Furthermore, ETFs are diversified vehicles, which means they flatten out idiosyncratic risks and, in turn, provide better risk-return profiles than individual stocks.
In a nutshell, ETFs offer investors an opportunity to gain exposure to a multitude of stocks at little cost.
In the sea of red in the equities market of late, certain ETFs seem to have a track record of handling turbulent market environments with condescension. Why? ETFs use “smart beta” strategies to allocate capital, which is a cutting-edge portfolio management technique that emphasizes cyclical portfolio diversification.
The global exchange-traded fund (ETF) industry attracted $31.42 billion in new investor capital in April, according to ETFGI, the world’s leading independent research and advisory firm. April’s inflows brought total ETF inflows so far this year to $337.11 billion. In addition, April recorded inflows for the 35th consecutive month.
For a year-to-date perspective, the top ten ETF inflow leaders have collectively attracted about $75 billion. Among them, Vanguard, the world’s second largest asset management company, has five seats in the top ten ETFs in 2022, with a total inflow of $46.64 billion.
Ranking ETF Code Inflows (USD Bil) +/- % to date 1 Vanguard S&P500 Index Fund V00 15.48 -16.50 2 Vanguard Total Stock Market VTI 10.87 -18.10 3 Vanguard Value Index Fund VTV 10.57 -6.10 4 ProShares Ultra Pro QQQ TQQQ 7.07 -63.10 5 SPDR Gold Shares GLD 6.21 1.80 6 Vanguard Total Bond Market BND 5.45 -9.90 7 SCHAWB US Dividend Equity SCHD 5.28 -6.40 8 DIREXION Daily Semi Conductor Bull 3X Shares SOXL 4.89 -70.70 9 iShares Short Treasury Bond SHV 4.79 -0.20 10 VANGUARD FTSE Developed Market VEA 4.27 -16.80
In news on fund flows, the top five dividend ETFs have collectively attracted more than $12 billion in inflows this year, as investors flock to safe assets amid heightened market uncertainty.
