The year ETFs went bananas

We just had to steal FactSet’s Elisabeth Kashner’s comment on 2024 that it was the year when ETFs went bananas. Her annual summary of the US ETF industry was as pithy as we have come to expect from her.

"US ETFs broke everything in 2024. We saw record-high flows and new launches. AUM crossed the USD10 trillion threshold. Crypto burst onto the scene. Active management exploded in popularity. Leveraged single-stock ETFs captured a shocking level of flows, and the ones focused on MicroStrategy actually stopped functioning properly. An ETF that profits off the volatility of an erstwhile software company that has become a leveraged play on bitcoin? Peak 2024," Kashner writes.

Enjoying some of those inflows over the year, have been Hartford Funds, whose Vice President and Head of ETF Platform, Brian Miller, reported that active fixed income has shown impressive growth for the firm. Miller says: "We were early movers in the active fixed income ETF space with our 2017 launch of Hartford Total Return Bond ETF (HTRB) and investors can see this ETF has outperformed its benchmark since inception. Four of our six active fixed income ETFs now have track records of over six years. We see a lot of growth and opportunity here and we are excited to see what we can achieve."

The UK’s distribution infrastructure for ETFs often gets lost in the conversation about the complexities in Europe, but this week we took a look at the appetite and availability of ETFs in the UK, talking to fund selectors about their experiences and predictions for our industry. The outcome seems to be that more education is needed about ETFs, with Sparrows Capital’s Arnie Millington commenting that the end client has little knowledge of ETFs in the UK. "I think that the majority of end clients are unaware of the differences in the underlying instruments they are invested in, ETFs included. There would be very little knowledge of the benefits of ETFs from the average person on the street."

There are also legacy platform issues as platforms were designed almost exclusively for mutual funds. Elston Consulting’s Henry Cobbe says that they hoped platforms would embrace fractional ETF trading in scale when his firm started building ETF portfolios in 2015. "Frustratingly, very few have," he says. "They say there’s a lack of demand. But we think it’s a reluctance to evolve legacy systems."

Voting is now open for the European ETF Express awards. Follow this link to support your favourite firms. Remember the firms with the most votes win.

Voting closes on 14th February and the event will be held in Knightsbridge on 20th March, 2025.

Beverly Chandler, Managing Editor

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