In less than four months, investors have already poured more cash into ETFs tracking U.S. stocks than they did in all of 2020.
The inflows of $246 billion this year eclipse last year’s total of $231 billion, according to data compiled by Bloomberg. Equity exchange-traded funds have added more than $26 billion so far in April, after taking in over $80 billion in both February and March.
With stocks trading near all-time highs, cash continues to flood into the $6.2 trillion ETF market, especially from new traders looking for a piece of the action as the economy rebounds. There’s also been growing interest in the category due to its tax efficiencies and lower costs relative to mutual funds.
“Investors usually are slow on the uptake when it comes to buying in after a bear market, and this was the swiftest bear market on record,” said Sam Stovall, chief investment strategist at CFRA Research. “The market is doing so well, and they are preferring equity ETFs over mutual funds because of the tax consequences.”
As cash floods into ETFs, debuts have also ramped up, notching the best start to a year in at least a decade, according to data compiled by Bloomberg. Issuers have rolled out numerous thematic funds in particular, as they try to tap retail investor demand for betting on hot market niches.
The ETF industry overall lured a record $251 billion in the first quarter, with $210 billion going into equities.
