Exchange-traded funds (ETF) are having another banner year with $10 trillion in assets globally according to EPFR, the intelligence research group.
Released today, the report shows that total global ETF assets have increased from $8 and $9 trillion in January and May of this year, respectively. The global total has been growing by roughly a trillion dollars each year since 2016, although some research shows direct indexing may be growing at a faster clip in the next five years. EPFR has tracked ETF flows since 2002 when collective ETF assets totaled approximately $2 billion.
It’ll come as no surprise that ETFs with North American mandates held the largest slice of the ETF pie by far, with 65% of the total AUM. The remaining regional breakdown shows global ETFs at 13%, emerging market ETFs at 9%, Asia Pacific ETFs at 7% and Europe ETFs at 5%.
According to EPFR, equity ETFs now account for 25 percent of the assets held by all equity funds, while 15% of all bond fund assets are lodged in ETFs.
ESG, Bitcoin fuel ETF surge
EPFR’s research cites several contributors from the past year that have helped fuel ETF inflows including the rising popularity of Bitcoin ETFs that set a new record for accumulating $1 billion in assets. Additionally, the surge of flows into ETFs with socially responsible or environmental, social and governance mandates helped drive the AUM into the $10 trillion range.
EPFR’s Director of Research, Cameron Brandt, notes that if each trillion dollars represents a milestone, then ETFs crossed an “astounding” three milestones in 2021 alone. He adds that one fourth of all funds that EPFR tracks are ETFs, which is another significant indicator of a rapid global growth story that “shows no signs of slowing down.”
“Investors have undoubtedly shown an accelerated interest in ETFs on a global scale, highlighting what’s become the investment vehicle of choice for a large portion of the investing population.”
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Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
