5 Charts on ETFs Recapping Equities in 2023

It’s been the year of active equity ETFs, the year of covered call ETFs, and a year when growth and quality has mattered most in the equity market. All of this is now clear from the year-to-date net inflows and fund performance records. However, based on advisor sentiment shared with VettaFi throughout the year, a lot of this could be seen coming.

VettaFi hosted approximately 230 virtual events with more than 6,000 advisors in 2023. To us, there are tremendous insights to be gleaned from listening to financial professionals with their fingers on the pulse. On a weekly basis, VettaFi publishes a “Chart of the Week” showcasing some of this data. Here’s a few examples.

Advisors Embraced Active ETFs

In late February 2023, VettaFi and T. Rowe Price hosted a webcast during which we asked, “Looking ahead, how likely are you to increase your exposure to active ETF strategies?” A combined 87% of the respondents said they were either somewhat or very likely, with the remainder not likely to do so.

Chart of the Week, Rosenbluth

See related: “Advisors Plan to Use Active ETFs More in 2023

This proved to be true, as active ETFs gathered $97 billion in the first 11 months of 2023. The cash haul represented 21% of the net inflows. This compares to active ETFs consisting of just a 6% share of the overall asset base.

Covered Call ETFs in Demand

Equity ETFs captured 71% of the active ETF net inflows. Some of the demand for active was for options-based equity income ETFs. The JPMorgan Equity Premium Income ETF (JEPI) added $13 billion. Its more growth-oriented sibling, the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) pulled in $6.1 billion. Other peer ETFs to see net inflows were Amplify CWP Enhanced Dividend Income ETF (DIVO) and the NEOS S&P High Income ETF (SPYI). We also saw new alternative income products from BlackRock, Goldman Sachs, and Morgan Stanley.

Given the growing supply. VettaFi asked a simple question to attendees during the Income Strategy Symposium in October. “Do you currently have an allocation to strategies that generate income using options?” While 47% of respondents said no, this was closely followed by the 46% that said yes, using ETFs. Approximately 7% said yes, using individual securities.

Income Using Options