Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013

26883

Venuto says ETFs held up well during market volatility

RELATED TOPICS​

Mike Venuto and the team behind TETF have written a note on the ETF response to latest market volatility.

Venuto is chairman of the TETF Index Committee and reports that the TETF.Index, the index that underpins the USD6 million ETF Industry Exposure & Financial Services ETF is up 33 per cent since launch in April 2017, against financial indices which have returned 26 per cent over the same period.

Venuto writes that volatility has returned to the markets after historical levels of dormancy. After almost USD77 billion in inflows into ETFs in January, Venuto’s study shows that historically, ETF monthly flows following a market pull back have benefited.

When S&P 500 returns were worse than -6 per cent, the team calculated the average of the following three months ETF flows revealing that ETF flows benefited from market drawdowns.
He writes: “While Mutual Fund flows overall are still higher than ETFs over time, the shift is changing, even in sporadic market pullbacks. It’s clear to see when bigger pullbacks occur, and tax basis is less of an issue for investors, the shift towards ETFs as the preferred vehicle for market investments has grown.

“These findings also end the myth that ETF flows turn negative in a bear market. The data illustrates that during the worst months of the market history, ETF flows respond positively,” he says.

With this standing as the biggest downturn since 2015, Venuto comments that other than the VIX products, which he points out did exactly what they said they would in the prospectus, the ETF industry conducted itself in a very orderly fashion.

 “The drops are often the last thing that the mutual fund holdouts need to switch,” he says. “People get complacent when markets are going up but after one or two bad days they do something and they aren’t selling a mutual fund to buy another mutual fund but to buy an ETF because it’s cheaper and transparent.”

Venuto predicts that VIX products will come back but they will be smarter, managing their exposure to the VIX, as opposed to being immersed in it.
 
 

Latest News

Bloomberg and General Index (GX) have announced the expansion of their strategic collaboration which builds..
EFAMA has commented on today’s vote by the European Parliament in favour of a new..
Morgan Stanley Investment Management (MSIM) has announced the launch of the MS INVF Systematic Liquid..

Related Articles

Juan Nozal, Mapfre Asset Management
Juan Nozal, Fixed Income Portfolio Manager at MAPFRE Asset Management, talks about the outlook for fixed income assets over 2024, in what he predicts will be an outstanding year for this asset class...
Juan Nozal, Fixed Income Portfolio Manager at MAPFRE Asset Management, talks about the outlook for fixed income assets over 2024,..
n response to the increased attention to climate change risk, institutional investors, asset managers, and asset owners in the US are committed to implementing a variety of measures to address climate change and reach their net-zero goals, according to Cerulli Associates...
n response to the increased attention to climate change risk, institutional investors, asset managers, and asset owners in the US..
Lord Hollick, House of Lords
A House of Lords committee has raised “significant concerns” over the role of UK regulators, their ability to operate with genuine independence from government and how they are held to account...
A House of Lords committee has raised “significant concerns” over the role of UK regulators, their ability to operate with..
Rob Edwards, Morningstar
The complexities of assessing performance from responsible investment strategies have been laid bare after Morningstar’s ESG indices delivered a mixed bag in 2023...
The complexities of assessing performance from responsible investment strategies have been laid bare after Morningstar’s ESG indices delivered a mixed..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by