This year was a record-breaking year on all fronts for the ETF business: inflows of $476 billion, and assets under management swelling to $3.4 trillion.
For 2018, investors will continue to pour money into low-cost index ETFs. It will be great news for investors, who will benefit from even lower fees, but it will be increasingly tough for even the biggest companies to make money.
Where did all this money come from? Dave Nadig, CEO of ETF.com, says the answer is pretty simple: traditional actively managed mutual funds.
"This was a year of running away from high-cost alpha seekers into low-cost vanilla beta exposure," Nadig told me.
Remember when Marc Andreessen said, "Software is eating the world?"
In the ETF universe, indexers are eating the world.
U.S. equity ETFs attracted the biggest chunk of money, but international equity was strong, as earnings in Europe and emerging markets picked up and, despite lower prices, investors continued to put money into fixed income: