Exchange-traded funds won 2016.
"They won it in enormous ways," said Matt Hougan, the CEO of Inside ETFs.
Hougan, along with Dave Nadig, the CEO of ETF.com, delivered their annual "State of ETFs" address to a full house at the 10th Annual Inside ETFs conference in Hollywood, Florida.
Among the major developments over the last year, Hougan and Nadig noted record inflows, massive gains against mutual funds, and even greater flows in favor of passive management.
The ETF industry saw record net inflows in 2017, with $284 billion in new money flooding into ETFs, smashing all previous annual records.
According to Hougan, that's 20% more than in any year before and twice what it was five years ago.
Not only is this a record, Hougan said "it's Michael Phelps in a shark suit. It crushed it."
These record inflows "dramatically undersells" ETFs' winning year. There were also massive gains against mutual funds.
Even as record amounts of money flooded into ETFs, more than $186 billion flew out of traditional mutual funds, creating a net one-year swing of $471 billion.
"Half a trillion dollars moving from mutal funds to ETFs in one year alone, and even that undersells it," Hougan said.
There were also significant flows in favor of passive. Looking just at flows into active funds vs. passive funds (including ETFs), there was an $840 billion swing in assets.
Even as ETFs have dominated inflows, Hougan and Nadig said, advisors face major new challenges.
"We've seen this unbelievable entry (into ETFs) from everybody in the asset management (industry)," Nadig said.
For the past decade, advisors have had this huge tailwind at their back, with ETF fees falling more than 80% on average for broad asset class coverage, according to Nadig.
But now, everyone's using ETFs.
