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Todd Rosenbluth, head of research at consultancy VettaFi, added that “it’s a sign that ETFs have become mainstream, and more investors are seeing the benefits despite, or indeed because of, the volatility”.
The strong performance of ETFs in 2022, according to Ju-Hon Kwek, senior partner at McKinsey, called into question the commonly held belief that “ETF development requires a ‘risk-on’ climate.”
Kwek emphasized that this year saw the emergence of a “notable pattern,” in which investments into comparable ETFs frequently followed outflows from active mutual funds a few months later.
He attributed this trend to “tax loss harvesting,” where retail investors sell mutual funds when they are losing money to avoid paying capital gains tax and investing the proceeds in ETFs, which benefit from a more investor-friendly tax structure and, generally, charge lower fees.
