ETF Assets Surged 2.5% in May, Hit $6.9T, Cerulli Says

Exchange-traded funds appear to have scored another win over mutual funds, as assets rose 2.5% in May to $6.9 trillion, while traditional funds lost assets, according to a Cerulli Edge report. 

The Boston-based researcher said ETF inflows were $33.4 billion, while mutual funds had $56 billion in outflows. Mutual fund assets slid 1.1% to $17 trillion.  

“Net flows continue to be indicative of investor demand for the ETF vehicle,” the report stated. “ETFs continue to witness growth as assets have increased three months in a row and four out of five months in 2023.”  

The report’s authors wrote that ETF assets are poised to breach $7 trillion. “Organic growth remains consistently positive and market performance generally has been strong thus far during 2023.”  

ETFs Gaining Share 

While mutual funds have more than twice the assets of ETFs, and have been around decades longer, ETFs are gaining share due to their tradability, liquidity and tax advantages. Companies including Fidelity Investments, JPMorgan Chase & Co. and others are converting some mutual funds to ETFs.  

“The findings do not surprise me,” noted Robin Giles, CFP, of Apex Wealth Management in Katy, Texas, in an email to etf.com. “As an industry, there are just more incentives to go towards ETFs. As soon as the big custodians made $0 ETF trading fees, that was the game-changer.” 

She added that when there are no trading costs, low expense ratios and built-in tax efficiency, it’s easy to understand why ETFs keep beating mutual funds. 

“Our industry does a great job adapting to the market's needs, and the ETF is a product of that,” Ashley Folkes, CFP and managing partner of Inspired Wealth Solutions in Hoover, Alabama, told etf.com in an email. He noted that nowadays he rarely sees a marketing campaign for mutual funds and even the company’s wholesalers aren’t talking about them. 

While active ETFs grew 2.5% to $392.3 billion, passive gained at a similar rate, rising to $6.54 trillion.  
 

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