It's been a banner year for ETFs.
Inflows into exchange-traded funds are on pace for their second-best year on record, with ETFs on the whole accruing $270.5 billion so far in 2019, bringing their total assets under management to nearly $4.3 trillion by the end of November, according to data compiled by ETF.com.
Several new themes have also emerged in the space that reflect burgeoning trends in the broader market, including a reinvigorated focus on ESG, or environmental, social and governance factors, on the semiconductor stocks, which have served as unofficial barometers for the U.S.-China trade dispute, and on the yet-unconfirmed but widely anticipated bitcoin ETF.
Dave Nadig, managing director of ETF.com, felt that ESG had the most meaningful impact on markets this year.
"We've been talking about ESG for years," Nadig said Thursday on CNBC's "ETF Edge." "This year, we finally saw some breakout flows."
In particular, Nadig highlighted the iShares ESG MSCI USA Leaders ETF (SUSL), which hit a new 52-week high Friday. The fund holds shares of 312 large- and mid-cap companies that score highly across 37 key ESG-related issues like carbon emission management, and counts the stocks of Microsoft, Google parent Alphabet and Johnson & Johnson among its top holdings.
"SUSL came out of the gate in May. A lot of people have been poo-pooing the ESG concept. [SUSL] pulled in a billion-and-a-half dollars in six months. I don't know what you call success if not that," Nadig said. "I think that took a lot of people by surprise. I think ESG is here to stay and people will stop snickering about it."
Tim Seymour, Seymour Asset Management's founder and chief investment officer, agreed, adding that retail investors, "self-directed, high-net-worth" buyers and financial advisors would likely contribute to the rise of ESG in the next year.
"You want to follow what institutions are doing. If you're a big pension fund, ESG is your mandate now. You have no choice but to be adherent, and I think these ETFs are going to continue to outperform," Seymour said in the same "ETF Edge" interview. "We've all heard about what's going on in the oil and gas sector and what companies are going to have to adhere to by 2021, 2022, so, I like the call."
Seymour had a different choice for the most impactful ETF of this year, though.
"This isn't too novel, but I think semiconductors — so, the SMH — were so important to really getting the pulse of the market and the dynamic with the trade war," Seymour said, adding that the group's cyclicality could actually be "supportive right now to the global economy."
"I actually think that this could even be a decent harbinger for 2020," Seymour said of the SMH, known formally as the VanEck Vectors Semiconductor ETF, which also hit a new 52-week high on Friday.
"Semiconductors — and if you think about the headwinds we were facing from trade all year — outperformed the S&P by 3100 basis points, but, more importantly, showed that this global cyclical trade was alive and well, and that [is] despite some of the biggest companies in the world being concerned about enterprise," the investor said.
GraniteShares founder and CEO Will Rhind found one of the most dynamic trends in the ETF space this year to be one that failed to bring any ETFs to fruition: the fervor around bitcoin.
"If you're talking about impactful, sometimes impactful is not always just about raw performance in the market," Rhind said in the same "ETF Edge" interview.
"I would actually think about impactful being what ETF got the most outsized coverage in the year, and to me, that was the bitcoin ETF, the bitcoin ETF that didn't even happen or doesn't even exist," he said. "We're still waiting for that, of course."