The global exchange-traded fund industry attracted $856.16 billion of net inflows in 2022, its second-highest annual net inflow ever, according to ETFGI data released Thursday.
Last year's net inflows were second only to 2021, when a record $1.29 trillion poured in, according to London-based ETFGI, an independent research and consultancy firm, whose global ETF industry flow figures include ETFs as well other exchange-traded products.
The industry's 2022 net inflows came amid challenging financial markets. For example, the S&P 500 index's price declined 19.4% in 2022 — its worst year since 2008.
"Institutional investors, financial advisors and retail investors globally are increasingly using ETFs," Deborah Fuhr, managing partner, founder and owner of ETFGI, said in an email Thursday.
ETFs are cost efficient, the minimum investment size is small and they can be bought or sold during the day like a stock on an exchange, Ms. Fuhr said. They also cover a variety of asset classes, she said.
"In the U.S., ETFs are more tax efficient than mutual funds due to the unique creation and redemption process," Ms. Fuhr said. "Retail investors can buy and sell without paying commission."
Many registered investment advisors are using model portfolios that use ETFs as building blocks, she added.
Assets invested in the global ETF industry totaled $9.23 trillion at the end of last year, down 10% from $10.26 trillion at the end of 2021, according to ETFGI. During December 2022, ETFs/ETPs attracted $69.37 billion of net inflows, marking their 43rd straight month of net inflows.