The Covid-crisis has become profitable for some in the financial sector. Among those who profit, are the Exchange Traded Funds (ETF), that seem to have stood up quite well in the face of the economic recession in recent months, and are now emerging stronger compared to traditional index funds.
Charles Symons, Director of iShares in Belgium and Luxembourg, a branch of the world’s largest asset manager BlackRock, points out that “[d]espite the crisis, we have been recording net inflows for several months“.
The reason? Lower interest rates that continue to strangle returns, combined with many other reasons, are increasing investments in ETFs by investors and institutions while leaving traditional funds behind.
This trend translates into a continuous increase of investments in this type of market funds. Between early January and late September, they recorded a worldwide growth of more than 7% and it´s now approaching the $6,800 billion mark, with its main niche in the American market but also particularly successful in Europe and this at a time when most funds rarely perform better than their benchmarks, especially after fees.
Guillaume Prache, Managing Director of consumer organisation BETTER FINANCE, added that “whereas active management strives to find the best market opportunities, passive management seeks to intelligently diversify its investments by reducing management costs to the strict minimum“; in this sense, ETFs have proven to be the most efficient and reliable tool.