Realistic investors broaden out market bets with ETFs

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Piles of cash amassed during lockdowns are flowing into financial markets as retail investors rush to put money into record-setting equity markets.

During the first four months of 2021, there were inflows of $269bn into US-listed equity exchange traded funds. That exceeded last year’s entire total of $249bn, according to CFRA, an independent research firm.

The US ecosystem of ETFs across equities, bonds, commodities excluding gold, and other areas has already attracted $332bn of net flows in 2021, a pace that puts the industry on track to match or exceed last year’s record $503bn of inflows. 

Investor enthusiasm reflects a couple of forces. Low-cost ETFs passed a structural test during the market turmoil of March 2020, further boosting their appeal for investors who prefer them over actively managed mutual funds. And investors have been drawn in by a story of a recovery in economic growth and corporate earnings after a pandemic-hit…

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