U.S. ETF market share hits record high

 

ETF trading hit a record 30.7% of U.S. stock market turnover in 2022, up from 25.3% the year prior.   This suggests a departure from their traditional role as long-term portfolio building blocks, as investors use them for trading on short-term market news and events. In 2022, U.S. ETF trading volumes hit a record high of $44.1T, an increase of 22.5% year-on-year despite the plateauing of turnover proportion at 25%-27%. In the first several months of 2023, ETFs comprised around 30% of trading volumes, demonstrating their sustained significance. Domestic U.S. equities ETF direct market trade remained negligible, with 86% of ETF trading on the secondary market. The dominance of passive, index-tracking funds is a concern regarding the expanding share of ETF trading, although supporters counter that choosing an index is an active choice.