ETF Trends to Watch in 2022: Conversions, International Interest and Sustainable Funds

First, I hope everyone had a wonderful New Year—or at least an opportunity to reset and recharge. After two years of living with COVID-19 and the impacts it has had on the global economy, I remain optimistic that things are slowly getting back to normal and that 2022 will see even more of a return to normalcy.

This is my sixth year of giving ETF-related predictions. As I reread some of the prior posts, I noticed the same themes recurring in my predictions—fixed income ETF increases, active ETF adoption, smaller funds getting bigger, etc. For this year, I tried to avoid those themes while also avoiding specific market calls on interest rates or S&P 500 Index end-of-year levels (not my forte).

You might rightfully be wondering what is left after omitting all those topics, but rest assured as there’s still plenty! On to my top three 2022 predictions.

  • Mutual fund-to-ETF conversions will continue to gain traction.

Since the beginning of this blog, I have repeatedly outlined many of the trading and structural nuances of ETFs that make them so attractive, such as their liquidity, daily transparency, ecosystem, tax efficiency, etc. Judging by the 2021 inflows in the United States, which were within spitting distance of $1 trillion dollars, I am not the only one who thinks this way about ETFs.

Last year was the first year in which we saw a decent number of mutual funds convert into ETFs, most likely for some combination of those reasons I listed above. The 2021 numbers were impressive; I counted 16 mutual funds converted to ETFs last year, with those ETFs having a combined $37 billion in assets.1