The emerging ETF trends as industry gathers for big conference

Over two thousand attendees are descending on the Fontainebleau Hotel in Miami Beach for the annual Exchange ETF conference. To entice participants, the organizers rented out the entire LIV Nightclub Miami at the hotel for a Super Bowl party Sunday night.

While much of the conference is an excuse to party among the ETF industry reps and the Registered Investment Advisors  (RIAs) that are the main attendees, the industry needs a lot of advice.

The Good news: still lots of money coming in, but the industry is maturing

The ETF juggernaut continues to rake in money, now with north of $8 trillion in assets under management.  Indexing/passive investing, the main impetus behind ETFs 30 years ago, continues to bring in new adherents as smarter investors, including the younger ones that have begun investing since the pandemic, come to understand the difficulty of outperforming the market.

The bad news is much of the easy money has already been made as the industry is now reaching middle aged. Just about every type of index fund that can be thought of is already in existence. 

To grow, the ETF industry has to expand the offerings of active management and devise new ways to entice investors.  

Actively managed strategies did well in 2023, accounting for about a quarter of all inflows.  Covered call strategies like the JPMorgan Equity Premium Income ETF (JEPI), which offered protection during a downturn, raked in money.  But with the broad markets hitting new highs, it’s not clear if investors will continue to pour money into covered call strategies that, by definition, underperform in rising markets.

Fortunately, the industry has proven very skilled at capturing whatever investing zeitgeist is in the air.  That can range from the silly (pot ETFs when there was no real pot industry) to ideas that have had some real staying power.

Six or seven years ago, it was thematic tech ETFs like cybersecurity or electric vehicles that pulled in investors. 

The big topics in 2024: …