The ETF investment vehicle makes sense

Exchange-traded funds continue to attract new investment and attract investor attention as the fund industry’s nascent investment vehicle matures.

According to a report by Greenwich Associates, ETFs are increasingly being treated as an asset class independent of equities, a major market trend for 2019, reflecting the growing importance and popularity of the shrewd investment vehicle on the global financial market, reports Bloomberg.

“The last two years have really seen ETFs become a tool for institutional portfolios,” Kevin McPartland, managing director of Greenwich Associates and one of the report’s authors, told Bloomberg. “Now it’s time to think about how we can do this better.”

ETFs attracted more than $310 billion in 2018. While inflows were down about 33% from 2017, the numbers were still the second-best performer in the past twelve years, according to data from Bloomberg. Additionally, mutual funds have recently seen redemptions, but ETFs continue to make money.

According to the Greenwich report, investors should stop treating ETFs like stocks. For example, popular bond ETFs should not be priced as a single stock, even though the investment vehicle can be traded like a stock on a brokerage account.

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