VettaFi Voices On: The Biggest Story of 2023

Good morning, VettaFi Voices! As we are in the final weeks of the year (and at the final VettaFi Voices roundtable for 2023), I figured we could discuss what the biggest stories in the ETF space were this year. What was the biggest story in ETFs in 2023 for you? What has the potential to have a lasting impact on the industry? Or is there something you think was a flash in the pan?

Todd Rosenbluth, VettaFi head of research: I have a few. Covered call ETFs are top of mind. 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.

Active Had a Strong Year

Dave Nadig, VettaFi financial futurist: To me the biggest story of the year has to be active management. So many products launched, and active funds have roughly 20% of flows as we go into year end. Whether from conversions or just persistent flows like JEPI, it’s the story.

Rosenluth: JEPI fits the active story too and we had many milestones in active ETFs. We had T Rowe Price hit $1 billion, then $2 billion in assets. We had Alliance Bernstein hit $1B

Nadig: However, the caveat there is that it’s definitely not performance chasing. Bellwether active fund, the ARK Innovation ETF (ARKK), has had over $800 million in outflows so far this year, while putting up 54% returns.

Rosenbluth: We had BlackRock bring Rick Rieder to the ETF market with the BlackRock Flexible Income ETF (BINC) and the BlackRock Total Return ETF (BRTR), which launched this week. We had Franklin bring its flagship income strategy into ETFs. We had T. Rowe Price launch the T. Rowe Price Capital Appreciation Equity ETF (TCAF) with a well known manager. The days when asset managers kept their best ideas for mutual fund investors only are gone.