Video Length: 00:28:02

In this episode of ETF Spotlight, I speak with Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA. We discuss the top ETF stories of 2019 and the outlook for 2020.

2019 is turning out to be another banner year for ETF inflows. Assets held by US-listed ETFs have surged to over $4.4 trillion but the bigger story this year is record inflows into fixed income ETFs.

We also saw a record number of ETF liquidations this year. Invesco recently announced the closure of 42 ETFs. Most of the ETFs that are shuttered failed to attract assets.

Is this trend healthy for the industry?

Many interesting thematic ETFs focused on areas like robotics, fintech and cloud computing are available to investors now. But thematic ETFs are generally more expensive and more volatile due to their narrow focus. Many of them have underperformed the plain-vanilla, ultra-cheap broad tech ETFs like the Technology Select Sector SPDR Fund (XLK - Free Report) and the Vanguard Information Technology ETF (VGT - Free Report) that are up almost 48%this year.

Do thematic ETFs deserve a place in investors’ portfolios?

Smart beta ETFs have become quite popular with investors and assets in these products now exceed $1 trillion. Some of these funds like the iShares Edge MSCI USA Quality Factor ETF (QUAL - Free Report) have been able to outperform the S&P 500 index over the long-term. Can these be used as core holdings in portfolios?

We have been witnessing cut-throat price war in the ETF world. Five exchange traded products now have zero or negative fees. Most brokerages now offer zero commission trading on stocks & ETFs.

How will commission-free trading change the ETF landscape?

2019 was a big year for ESG ETFs. The top launches of this year are two ESG ETFs--the iShares ESG MSCI USA Leaders ETF (SUSL - Free Report) and the Xtrackers MSCI USA ESG Leaders Equity ETF (USSG - Free Report). Both these products have gathered over $1.6 billion in assets, though a lot of that money came from Finland’s largest pension insurance company.

The SEC approved the non-transparent ETF structure this year. This would help active managers who are concerned about the risk of “front running” by competitors. Will these be popular with investors?

Todd’s top ETF picks for 2020 are the Financial Select Sector SPDR Fund (XLF - Free Report) and the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD - Free Report). Tune into the podcast to learn more.