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ETF launches are already on top of last year’s record pace

(Bloomberg) — Issuing new exchange-traded funds this year and threatening to overtake the historic 2021 boom as firms bet big on continued growth.

According to Bloomberg data, there were 50 new fund launches in 2022, compared to 38 fund launches at this time last year. Jane Edmondson, chief executive officer of EQM Capital, says the total number of actively managed strategies has increased from 27 to 33 this year, reflecting the flurry of mutual fund conversions.

“The higher number of new ETFs launched this year compared to last year is due to a lack of demand as some issuers were cautious about launching new products early last year,” Edmondson said. “But it is also evidence of how investors and markets continue to adopt and prefer an ETF structure compared to a mutual fund.”

Edmondson said issuers were hesitant to roll out new products last year, given the uncertainties related to COVID-19. Now, nearly two years into the pandemic, business disruptions are becoming a concern, leading to new product launches.

According to BI’s James Seifert, the growth of new funds to start the year is particularly interesting because down markets typically slow down ETFs. A Federal Reserve focus on raising interest rates to counter high inflation and a more vulnerable earnings season is enough to make any investor apprehensive, but so far, volatility has come as a sentiment-killer as expected. hasn’t been great.

“The fact that there were still a lot of ETFs launched in 2022, despite the dismal performance of the stock market in general and growth stocks in particular, is a good sign from issuers on their expectation of growth for the ETF market,” Seifert said.

Several signs are pointing to continued ETF growth ahead of the year, and this is especially true for actively managed funds as market volatility encourages stock-picking. Add to that the increased relevance on nontraditional funds, and it’s no surprise to see these strategies grow in popularity.

Tea. “I don’t think the launch growth is surprising, especially in Active,” said Scott Livingston, global head of ETF strategy at Rowe Price Associates. “Now that active managers have the ability to shield their IP but still provide investors with the benefits of an ETF wrapper, we expect active launches to continue to grow.”

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