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2022 was another great year for the fast-growing ETF industry. US ETFs attracted net inflows of almost $600 billion, the second highest on record, despite continued market turbulence.

Mutual funds, on the other hand, lost assets at a record pace, resulting in a $1.5 trillion gap in the flow of money from them into ETFs, per Bloomberg data.

About 430 new ETFs were introduced last year, slightly lower than the record-breaking number of 477 in 2021. New launches included some very interesting strategies like single security ETFs.

Many actively managed ETFs beat their benchmarks in challenging market conditions and gathered a lot of cash. These included the JPMorgan Equity Premium Income ETF (JEPI - Free Report) and the iMGP DBi Managed Futures Strategy ETF (DBMF - Free Report).

Fund managers are also converting some of their mutual funds into ETFs. About 40 mutual funds have been converted into ETFs since Guinness Atkinson started the trend in March 2021, followed by a big move by Dimensional Fund Advisors.

We also discuss fee compression trends, the role of alternative strategies in a portfolio, and the rise of anti-ESG ETFs.

Elisabeth’s favorite ETFs for 2023 include the Vanguard S&P 500 ETF (VOO - Free Report) and the Vanguard Total Stock Market ETF (VTI - Free Report). Apple (AAPL - Free Report), Microsoft (MSFT - Free Report), and Alphabet (GOOGL - Free Report) are the top holdings in these funds.

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