Small ETFs Gaining Traction in 2023

Small ETFs Gaining Traction in 2023

Most of the fastest-growing funds started from a small base of assets.

sumit
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Senior ETF Analyst
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Reviewed by: Sumit Roy
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Edited by: Sumit Roy

Here at ETF.com, we talk a lot about asset flows into and out of exchange-traded funds. Each day, each week and each month, we put together lists of the ETFs that garner the largest inflows and the largest outflows of assets—an indication of where investors are putting their money to work.  

Most of the time, the same batch of ETFs finds itself on these lists. These funds are usually very liquid, extraordinarily cheap and have billions of dollars in assets.  

Funds like the Vanguard S&P 500 ETF (VOO), the Vanguard Total Stock Market ETF (VTI) and the iShares Core S&P 500 ETF (IVV) routinely find themselves atop the inflows lists.  

That said, despite their hefty inflows, these funds usually aren’t the ETFs that are growing the fastest. On an absolute basis they are, but not on a percentage basis.  

For instance, VTI’s inflows of $2.9 billion this year—the ninth-most of any ETF—represent only a little more than 1% of the $261 billion in assets the fund had at the start of the year.   

On a percentage basis, there are loads of ETFs that have seen much larger inflows in 2023—ETFs that almost never make our flows lists because they are starting from a much smaller asset base. In this article, we’ll take a look at these fast-growing funds, which, in many cases, are flying under the radar of the ETF investing public at large.  

Measuring Growth  

Admittedly, it’s much easier for a small fund to register a big percentage increase in its assets. A fund with only $1 million in assets under management simply has to grow to $2 million for its assets to double. Is that noteworthy? Not really.  

How about a $1 million fund growing to $50 million? Now that could be noteworthy for some; others might not pay attention until a fund grows even larger, into the hundred-million or even the billion-dollar range.  

That’s why we’ve put together two lists: one that showcases the fastest-growing ETFs of the year no matter their starting level of assets, and another that includes ETFs that had $100 million or more in assets at the start of 2023. 

Today, we’ll go over the broader list and tomorrow, we’ll go over the list with the higher starting level.  

 

Fastest Growing ETFs of 2023 (Starting AUM >$0)

TickerFundAssets on 12/31/2022 ($M)YTD 2023 Inflows ($M))Inflows (%)
PLDR Putnam Sustainable Leaders ETF5.93405,780%
PFUT Putnam Sustainable Future ETF7.11522138%
TSLY Yieldmax Tsla Option Income Etf0.43920%
WTAI Wisdomtree Artificial Intelligence And Innovation Fund0.76847%
NVDS AXS 1.25X NVDA Bear Daily ETF9.759610%
BKHY BNY Mellon High Yield Beta ETF50.5279552%
QTJA Innovator Growth Accelerated Plus ETF - January3.418540%
FSIG First Trust Limited Duration Investment Grade Corporate ETF72.7355488%
NVDL GraniteShares 1.5x Long NVDA Daily ETF0.63472%
COWG Pacer US Large Cap Cash Cows Growth Leaders ETF1.04415%
MEM Matthews Emerging Markets Equity Active ETF6.325399%
BKMC BNY Mellon US Mid Cap Core Equity ETF90.1356395%
SIHY Harbor Scientific Alpha High-Yield ETF30.0118394%
CONL GraniteShares 1.5x Long COIN Daily ETF0.93393%
WNDY Global X Wind Energy ETF3.413371%
NBCT Neuberger Berman Carbon Transition & Infrastructure ETF5.319364%
PBDC Putnam BDC Income ETF6.121349%
NSPL NightShares 500 1x/1.5x ETF3.111346%
FLSA Franklin FTSE Saudi Arabia ETF5.017331%
LQDW iShares Investment Grade Corporate Bond Buywrite Strategy ETF14.547323%

 

Heady Growth From a Small Base  

Perhaps unsurprisingly, the first list includes smaller ETFs that grew their assets from a tiny base. That includes the Putnam Sustainable Leaders ETF (PLDR), which gathered $340 million in new assets after starting the year with only $6 million in AUM, and the AXS 1.25X NVDA Bear Daily ETF (NVDS), which picked up $59 million in assets on top of the less –than $10 million it started the year with.  

Most of the other funds on the all-encompassing list also started with less than $10 million in AUM at the beginning of the year.  

However, there are a few ETFs among the fastest growing that started with larger bases of assets, such as the BNY Mellon High Yield Beta ETF (BKHY) and the Harbor Scientific Alpha High-Yield ETF (SIHY).  

BKHY’s $50 million start-of-year AUM got a big boost thanks to $279 million of inflows during January and February, while SIHY’s $30 million AUM at the start of the year was bolstered by $118 million of inflows.  

Trends  

As I looked through the list of fastest-growing ETFs, I noticed a few trends. One is that single-stock ETFs are picking up a little bit of traction. 

Sure, the $3 million of inflows for the GraniteShares 1.5x Long NVDA Daily ETF (NVDL) and the GraniteShares 1.5 Long COIN Daily ETF (CONL) aren’t much, but the $59 million into the aforementioned NVDS is a decent sum. 

Meanwhile, the strong inflows for the two sustainable ETFs, the Putnam Sustainable Leaders ETF (PLDR) and the Putnam Sustainable Future ETF (PFUT), suggest that despite being under attack, ESG is far from dead. 

Finally, the $11 million of inflows into the NightShares 500 1x/1.5x ETF (NSPL) is also interesting. I recently spoke with NightShares’ Bruce Lavine about the “night effect” and how investors can use this decades-long phenomenon to outperform.  

At least some investors seem to be buying into that story.  

 

Email Sumit Roy at [email protected] or follow him on Twitter sumitroy2  

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.