A Modern Prime Broker for the New World of ETFs
2023 has seen a number of shocks to global financial markets, from bank bailouts to the prolonged effects of a heightened interest rate environment. Historically, investors have turned to ETFs to allocate capital and manage risk during periods of market stress — and this time is no different.
Last year, asset managers launched 430 new ETFs amid the poor performance of stock and bond markets. (i) U.S. ETF trading volume reached nearly 40%, compared to an average of 32% in 2022. Increased interest rate volatility is spurring outsized trading in U.S. Treasury ETFs, which traded nearly 13% more than their 2022 averages in Q1 2023, a quarterly record. (ii)
Recent growth in ETF volumes can also be attributed to an increase in ETF conversions. Since March of 2021, 33 mutual funds, with almost $60 billion in AUM, converted themselves into ETFs. (iii) This may seem like a drop in the bucket of the $7 trillion-dollar U.S.-based ETF market, but much of this money came from fund firms that were not previously ETF issuers.
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