Why Pick Frankfurt for Your ETF Investments?
Exchange-Traded Funds (ETFs) Set Unprecedented Records in November
In November 2021, the ETF industry skyrocketed, breaking records in net inflows and total Assets Under Management (AUM), surpassing traditional actively managed investment funds. This trend highlights the increasing importance of ETFs versus their active counterparts. Let's delve into why Frankfurt could be an excellent choice for your ETF investments.
Investor Shift Towards ETFs
Investors are increasingly gravitating towards ETFs, resulting in significant outflows from traditional mutual funds. Why? ETFs outshine active funds structurally and operationally[1][2].
Cost-Efficiency and Tax Advantages
ETFs usually come with lower costs and superior tax efficiency compared to traditional active funds[2]. Although hybrid structures may not provide all standalone ETF's tax benefits, the overall tax efficiency is still a considerable allure for investors.
Flexibility and Liquidity
Unlike traditional mutual funds, ETFs are traded on exchanges, offering real-time liquidity and intraday trading[5]. This feature empowers investors with enhanced control and quick responses to market fluctuations.
Active ETFs on the Rise
While passive ETFs reign, active ETFs, especially in North America, have gained momentum. In 2024, active ETFs represented almost half of new ETF launches, reflecting investors' appetite for actively managed strategies bolstered by ETFs' transparency and liquidity[2][3].
Regulatory Green Light for ETF Growth
Regulatory developments like the expiration of Vanguard’s ETF patent and simplified filing processes with the SEC have fueled innovation, driving asset managers to convert mutual funds into ETFs or launch ETF share classes within mutual funds, ultimately propelling ETF market growth[1][2].
Global Expansion
The ETF industry's growth isn't confined to the U.S., extending to Europe and Asia-Pacific markets[1][2]. This expansion is driven by harmonized regulatory approaches and growing demand for efficient investment vehicles worldwide. Countries like Ireland and Luxembourg have adjusted ETF share class treatments to align with popular models, fostering ETF launches and adoption globally.
Performance and Trends
Some ETFs excelling in sectors like communication services and thematic areas such as AI and sustainable futures demonstrate impressive performance[4][5]. These trends entice investors searching for exposure to specific market segments efficiently and affordably through ETFs.
In conclusion, the growth of ETFs in November 2021 is warranted by factors including investor preference for cost-effective, flexible, and tax-efficient investment vehicles; the ascent of active ETFs combining professional management with transparency and liquidity; regulatory support for ETF share classes; and global market expansion[1][2][3][5]. Choose Frankfurt for your ETF investments, capitalizing on these opportunities.
- Recognizing the growth in ETFs, some asset managers are converting mutual funds into ETFs or launching ETF share classes within mutual funds in Frankfurt, taking advantage of the regulator's green light for ETF growth.
- Undeniably, Frankfurt, as a global financial hub, offers a significant opportunity for UCITS-compliant ETFs, given the increasing importance of ETFs versus their active counterparts and the trend towards cost-efficiency and tax advantages in ETF investments.
- With the widespread preference for exchange-traded funds (ETFs) in Frankfurt, investment in an H5-listed ETF could provide access to sectors like communication services and thematic areas such as AI and sustainable futures, allowing for efficient and affordable exposure to specific market segments.
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