The streak of record-breaking years for ETF launches that started in 2020 came to a quick halt last year as war erupted in Europe, inflation and interest rates soared and investors retreated to safety.
As projected, 431 funds will have launched in 2022, 9.6% fewer than the 477 in 2021, according to ETF.com data. That was still more than the 318 launches in 2020, a surprise given that the world was grappling with the first year of the COVID-19 pandemic and the related market crash.
Actively Managed Funds Dominate
Actively managed ETF launches again outpaced new passive funds, representing 63% of all issues last year—that number is roughly in alignment with the last two years’ breakdown. The approval of the ETF Rule in 2019 made launching actively managed ETFs more attractive, if only for its automatic allowance for custom baskets for active ETFs.
The year also saw new issuers enter the industry that were well-established in the mutual fund industry, like Capital Group, Neuberger Berman and DoubleLine. We saw innovative products come to market, including leveraged and inverse single-stock ETFs representing roughly 6% of all launches. These latest additions have struggled to grow despite being widely anticipated.
Other new concepts brought to market include ETFs investing in a single tenor of Treasury securities and the NightShares family of ETFs that capture the performance of stocks in after-hours trading. The launch of four ETFs that invest in commodity futures tied to the raw materials used in manufacturing batteries for electric vehicles was another standout category as funds of this nature had not been available prior to 2022.
BlackRock rolled out more ETFs than any other issuer in 2022, launching a total of 20 funds trading under the iShares and BlackRock brands. BondBloxx, a brand-new firm that launched its first products in February, came in second with 19 ETFs and roughly $540 million in assets under management. The firm specializes in fixed income ETFs.
Along with launches slowing in the difficult economic environment, fund closures nearly doubled, jumping to 145 from 79 in 2021. In 2020, a record 275 closed as the Covid-19 pandemic surged across the globe.
Contact Heather Bell at [email protected]