(Bloomberg) — Cash-management corporations launched new exchange-traded funds at a fast tempo final month, shaking off fears that the $7 trillion business is already overrun with low-cost funding autos.
Sixty-nine new ETFs got here to market final month, one of many busiest since not less than 2016, knowledge compiled by Bloomberg present. It was additionally the one month since September 2021 when there have been greater than 50 launches.
Quite a few the brand new ones centered on the fixed-income market, although the record additionally contains worldwide and commodities-focused funds. Matthews and Capital Group every rolled out 5 ETFs, whereas Brookstone Capital Administration added eight to its lineup.
“It’s simply exhibiting the affinity buyers have for ETFs and issuers coming to handle these wants — from all throughout the capital markets spectrum too,” Todd Sohn, ETF and technical strategist at Strategas Securities, stated of the raft of launches.
The newcomers — which spanned the spectrum of passive and energetic autos — are coming into into an already extremely aggressive house, with greater than 3,200 ETFs already in existence.
The fast growth has raised the query of whether or not the market is already too saturated with choices, on condition that there are such a lot of dedicated to shares, bonds and quite a few tailor-made niches like investments in house or innovation. Which means it’s removed from sure that any new launches will appeal to investor consideration or cash. The truth is, a variety of firms have been culling their lineups, with some liquidating funds that launched through the pandemic’s stock-market heydays however did not materialize significant flows.
A slew of final month’s rollouts concentrate on the fixed-income market, with Dimensional and Capital Group amongst those who debuted short-duration ETFs. Such funds have drawn large inflows this yr, with ultra-short authorities bond funds — or these with maturities of lower than one yr — seeing greater than $30 billion are available in as yields maintain at excessive ranges.
“Is that this the yr of the bond ETF? Definitely flows appear to be shouting that from the rooftops,” Lara Crigger, editor-in-chief at VettaFi, stated in an interview. “By way of cash going into the ETFs, it’s favoring short-term ETFs, ultra-short time period cash-like devices.”
Learn extra:
The $7.4 Trillion ETF Trade Is Littered With One-Hit Wonders
Wall Road Offers Contemporary Blow to Shares With Push to Money
In the meantime, regardless of September’s rocky stretch for markets, shares are up this yr. And such up markets are likely to drive firms to place out extra merchandise, in line with Bloomberg Intelligence’s Athanasios Psarofagis.
“Launches are likely to mimic the market efficiency, slowing when markets drop and choosing up after they rally,” he stated. “The nice run this yr has introduced issuers again.”
