Top ETF Trends For 2019

Though 2018 proved to be the worst year for the global stock market since 2008, the broader U.S.-listed ETF industry witnessed the second-highest growth year in terms of AUM. Net new inflows were approximately $315 billion, per eftf.com. The strength continues in the New Year with U.S.-listed ETFs pulling in about $12.6 billion in the seven trading sessions of 2019. This suggests a strong appetite for ETFs.

The continuation of some of last year’s hottest trends as well as new ones confirms the bullishness in the ETF industry. Below we have highlighted some of these:

Actively-Managed ETFs Rule

As 2019 is likely to be marked by uncertainty and volatility due to U.S.-China trade deal, Brexit concerns, global growth worries, and one-month long government shutdown, active investing is expected to garner strong investors’ interest. This is because the actively-managed funds use various skills and attributes (like top-down approach, bottom-up approach, value investing, growth investing or absolute returns strategy) and can shift their allocations and positions according to the market environment.

As a result, these funds generally outperform the benchmark index, especially in illiquid or inefficient markets or even if the odds are against it. Though active funds are arguably expensive as these involve research expenses associated with the manager’s due diligence and additional cost in the form of wide bid/ask spread beyond the expense ratio, these could generate superior risk-adjusted returns, after expenses, if chosen carefully.

Some of the ETFs that target the broader stock market are Davis Select U.S. Equity ETF DUSA  with expense ratio of 0.65%, First Trust Horizon Managed Volatility Domestic ETF (HUSV - Free Report) with expense ratio of 0.70%, ClearBridge All Cap Growth ETF CACG with expense ratio of 0.53%, Vanguard U.S. Multifactor ETF VFMF with expense ratio of 0.18%, and Cambria Core Equity ETF CCOR with expense ratio of 1.05%.

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