What’s behind the recent surge in the popularity of ETFs?

The growth of ETFs in the past few years has been remarkable. Looking just at the U.S., for example, ETF assets under management (AUM) crossed a milestone of $4 trillion in 2019. Now, less than two years later, that number is nearing $6 trillion. The market remains incredibly active as issuers and investors both increasingly take advantage of the ETF investment structure.

The key benefits of the ETF wrapper have always been lower infrastructure costs, greater tax efficiency for the fund, instant diversification in a single trade and almost instant global distribution opportunities. ETFs offer an ecosystem that’s ripe for innovation, and that’s exactly what we’ve seen in recent years.

The ETFs that issuers have been bringing to market recently are often more creative and/or more complex in structure, from hybrid funds to sector products. In 2021, thematic ETFs especially have seen significant cash...

Investopedia and our third-party partners use cookies and process personal data like unique identifiers based on your consent to store and/or access information on a device, display personalized ads and for content measurement, audience insight, and product development. To change or withdraw your consent choices for Investopedia.com, including your right to object where legitimate interest is used, click below. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data. List of Partners (vendors)

You can add location information to your Tweets, such as your city or precise location, from the web and via third-party applications. You always have the option to delete your Tweet location history. Learn more