In 2023, many new Exchange-Traded Funds (ETFs) popped up, hitting a record of 506 in the U.S. by mid-December, beating the previous high of 475 in 2021. The ETF scene saw some changes, with more active funds, mutual funds throwing in ETF options for tax perks, and a move towards fancy products.
Most new ETFs in 2023 (about 65.3%) were ‘active,’ meaning fund managers picked where to invest instead of just tracking an index. Also, some big mutual fund managers added ETF share classes to their offerings to help clients save on taxes when Vanguard’s trick for cutting capital gains taxes expired.
Looking ahead to 2024, folks are watching the Securities and Exchange Commission (SEC). There’s a buzz about decisions on ETF share classes for mutual funds, similar to what Vanguard did, with applications from big names like Fidelity and Dimensional Fund Advisors pending.
Another thing to watch in 2024 is the SEC’s stance on crypto-focused ETFs. An analyst suggests there might be a chance of a Bitcoin ETF hitting the market this year. In 2023, a court sided with Grayscale, a crypto asset firm, saying the SEC didn’t have good reasons to block Grayscale’s plan to turn its Grayscale Bitcoin Trust into an ETF.
So, as 2024 unfolds, what the SEC decides and the growing interest in crypto ETFs could be the big stories shaping the world of exchange-traded funds.