Ease of use and open access, transparency, lower costs, and frankly better performance by ETF's compared to hedge funds is causing a massive shift in the way small and more importantly large institutions invest. Early in May, the amount of funds in global ETF's, which have only been around for just the past 22 years, topped $3 trillion. May also has marked the first time ETF's total asset value topped that of the 66 year old investment vehicle known as hedge funds, which currently sit around $2.9 trillion globally.
While mutual funds still dominate the investment world with more than $15 trillion in assets under US managed funds, ETF's certainly appear to be heading as the clear #2 in terms of total dollars invested. The industry has seen massive growth over the past few years, specifically in the US; 2013 US ETF assets rose by $188 billion, 2014 that figure jumped to $243 billion, and at the start of May year-to-date US inflow were already at $72 billion, which is a must faster start than experienced in 2014 when only $35 billion had been pumped into ETF's from the start of January to the beginning of May.
While the massive growth in ETF's over just the past five years is astonishing, due to the four qualities they offer which hedge funds don't, it shouldn’t be of a surprise that their popularity has and will continue to grow. So let's take a look at the four qualities. Continue reading "Move Over Hedge Funds, ETF's Are Taking Over"
