In a breakthrough year for the ETF market, it has been established that “holding is more important than debuting”. The growth of existing ETF products has surpassed that of new issuances in 2023, marking a significant shift in the industry’s sales pattern.
The market for ETFs is expected to witness explosive growth in 2023, with the scale of ETFs exceeding 2 trillion yuan for the first time in history. This growth is primarily attributed to the continued marketing of existing products, which will contribute to 85% of the overall increase in the scale of ETFs. In contrast, the proportion of new issuances will shrink to 15%, reflecting a significant change in the industry’s focus.
In response to the sluggish new fund issuances and the challenging equity market, fund companies are increasingly prioritizing the holding of ETFs as a strategic move to adapt to market adjustments and seek new directions for growth. The growing scale of existing ETFs has become a crucial measure taken by these companies to navigate the changing market landscape.
While the mainstream of the ETF market still revolves around broad-based and industry-themed ETFs, the industry is facing obstacles in terms of innovation. New ETFs such as REITs ETFs, commodity futures ETFs, actively managed ETFs, FOF ETFs, and multiple and inverse ETFs are still making slow progress, which has made new issuances less attractive.
The tremendous growth in the ETF market is also attributed to policy support, with ETFs becoming a crucial tool for asset allocation in the market. Investment entities such as FOF and private equity have increased their allocation of ETFs, further driving the market’s growth.
Amid the industry’s rapid growth, the ETF market is undergoing a round of reshuffle, with some ETFs announcing their liquidation procedures and others being reduced to mini-funds. Furthermore, securities companies are transitioning from centralized sales to asset allocation ecology and building an efficient interactive mechanism for high-quality ETF holding ecology.
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