Week of January 9, 2023 KPI Summary

This week, the industry experienced 7 ETF launches and 1 closure, shifting the 1-year Open-to-Close ratio to 2.91 and total US ETFs to 3,098.

After highlighting it last week in our 2022 review, we are taking a deeper look into Index performance in the ETF industry, specifically Active funds, which we haven’t dug into since last August.

> In the past 12-months, Active ETFs have increased their assets by 25.4% and amount of total funds by 30.4% (+241). Meanwhile, Traditional index funds have decreased in assets -5.9% and down 2 funds in total and Non-Traditional (known to many as “Smart Beta”) are also down -4.6% in assets and up 9 total funds.

> > Although the asset market share gain isn’t massive for Active ETFs (from 4.0% to 5.3% over 12-months), the quantity of funds has really affected the industry. The amount of Active funds has more than doubled over a 24-month time period (475 to 1033).

> The Predicted 12-month Revenue data has also taken a huge swing over the past two years.

> > On 1/17/2021, Traditional Index funds accounted for 51.7% of the predicted revenue, with Non-Traditional at 39.6% and Active with 8.7%. Since then, Traditional index has given up that lead and will likely soon be passed by Non-Traditional funds. Traditional index has 44.6%, Non-Traditional next with 43.1%, and Active rising to 12.3%.

> Of the total $1.16 Trillion of Predicted Revenue, the difference between Traditional and Non-Traditional is down to just $18.3 Billion.

> Lastly, we realize the asset data presented for each index is not directly correlated to the funds’ performances. According to our Security Master, Traditional funds are down an average of -7.6% over 12-months, which just edges out the Active index at -7.7%. Non-Traditional funds were hit the hardest by 2022’s downturn and have a 12-month average fund performance of -10.3%.

> The tracked indexes had similar experiences in the past week. The Toroso ETF Industry Index was up 3.29% while the S&P Financial Select Sector Index trailed at 2.05%.