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“There are actually more active ETFs now listed than passive ETFs, which is astounding.” – 01:35
Remy Blaire engages in a compelling discussion with Burke Ashenden, the VP of Capital Markets and Institutional Strategy at Innovator Capital Management. The segment focuses on the remarkable growth and evolution of Exchange-Traded Funds (ETFs) in the current financial landscape.
Remy begins by highlighting recent developments in the ETF space, including Grayscale’s celebration of its new multi-token crypto fund and Bitwise’s launch of a Solana staking ETF. She notes that ETFs are on track for another record-breaking year, with expectations of over $1 trillion in new inflows, following a historic performance in 2022. Burke emphasizes that this year has been a “juggernaut” for ETFs, coining the term “triple crown” to describe the record flows, launches, and trading volumes.
As the conversation unfolds, Burke explains the significant shift towards active ETFs, which now account for one-third of flows, a stark increase from previous years when they represented only a small percentage. He discusses the emergence of options-based and derivative-based ETFs, such as buffer ETFs, which are gaining traction in the market. This evolution reflects a broader penetration of ETFs into various market segments, moving beyond their traditional role as low-cost passive investment vehicles.
Remy and Burke also explore the increasing interest from institutional investors, including pensions and endowments, who are reevaluating their investment strategies. Burke points out that these institutions are now looking to ETFs for their liquidity and cost-effectiveness, especially in a turbulent political environment. He explains that many institutions are seeking to replace expensive hedge fund strategies with more accessible ETF options that still provide risk management.
The discussion shifts to the intersection of ETFs and digital assets, where Burke notes a significant change in institutional attitudes towards cryptocurrencies. He highlights that institutions are now more willing to invest in crypto ETFs, allocating a small percentage of their risk budgets to assets like Bitcoin. Burke emphasizes the importance of managing volatility in these investments and suggests that buffer ETFs can serve as a protective measure.