Page 16 - Investment Advisor January/February 2022

ETF ADVISOR

By Bernice Napach

Expect Hundreds of ETF Launches in 2022,

Mostly Active Funds

This year is expected to be another record-setting year for flows and new funds.

his year is expected to be another can catch lightning in a bottle.”
boffo year for U.S. ETFs, with even He expects 400 to 500 new ETF
Tmore launches and greater fund launches in 2022.
flows than 2021, a record-setting year.
Four hundred forty-five new ETFs ONGOING ETF TRENDS
launched in 2021 as of Dec. 20 compared Other expectations for the ETF uni-
with 309 in 2020, and ETFs collected verse in 2022 involve the continuation
about $800 million in net new fund of ongoing trends:
flows — more than two and a half times • More launches of semi-transparent
the flows into mutual funds, according ETFs, which don’t disclose their
to Morningstar data. holdings on a daily basis, and thus
About 60% of the ETF launches were “To launch and not to convert will allow portfolio managers to avoid
actively managed in the conventional continue to be the preference of many any front-running of their positions.
sense, but if one includes all factor and asset managers,” Johnson said. • More introductions of ESG-focused
thematic ETFs, the percentage jumps to In 2022, Capital Group, which has ETFs.
about 87%, said Ben Johnson, director over $2 trillion in assets, will be doing • Continued growth of ETF model
of global exchange-traded fund research just that, introducing ETFs for the portfolios.
at Morningstar. first time, as will Neuberger Berman, “Investors’ growing comfort with
both joining legacy firms like Putnam ETFs in 2021 positions the industry for
EXPECT MORE Investments and Dimensional Fund continued success in 2022,” wrote Todd
He and other fund analysts expect that Advisors, which entered the ETF uni- Rosenbluth, head of ETF and Mutual
hundreds more ETFs will launch in 2022 verse within the last year or two. Fund Research at CFRA. in his 2022 ETF
and the majority will be active. “There is The Security and Exchange outlook. “However, with more than 2,000
no white space left in traditionally defined Commission’s ETF Rule 6c-11, adopted in products available and many competing
passive products,” said Johnson. “We don’t mid-2019, helped pave the way for ETF with one another for investor attention,
need another total return international launches from established mutual fund we expect asset managers to continue to
developed market cap-weighted index companies by eliminating the require- focus on investor education to highlight
ETF or another S&P 500 index ETF.” ment that asset managers file for exemp- what makes their ETF unique.”
What investors need instead are tive relief every time they launch a new What ETF analysts don’t expect to
ETFs that suit today’s uncertain mar- ETF and allowing all transparent ETFs to see in 2022 is the introduction of a spot
kets, according to Michael Loukas, CEO make use of custom baskets. Bitcoin ETF.
of TrueMark Investments. “If efficient But new ETFs are expected not only “We will see some clarification on
markets lend themselves to passive from traditional asset managers like crypto regulation, but not a Bitcoin
strategies, then inefficient, uncertain Capital Group, but also from RIAs, said ETF,” said Nadig, who expects “some
markets lend themselves to active ETFs.” Dave Nadig, chief investment officer sort of regulatory guidance or rule-mak-
Some of the new active ETFs could and director of research at ETF Trends. ing around stablecoins that could lead
be ETF conversions, which happened “RIAs can roll up their model portfolios to a regulated product like a blockchain
for the first time in 2021 when Atkinson or other investments representing a spe- ETF owning Treasurys as well as pos-
Asset Management converted two cific area of expertise into an ETF to cre- sibly more Bitcoin futures ETFs.
mutual funds to ETFs. Others will be ate operational efficiency for themselves
clones or close cousins of existing mutu- and potentially new revenue streams,” Senion writer Bernice Napach can be reached Adobe Stock
al funds or entirely new products. he said. “There’s always the chance you at [email protected].

14 INVESTMENT ADVISOR JANUARY/FEBRUARY 2022 | ThinkAdvisor.com