Asset prices are rising with fire exchange-traded products Global capital inflows reached $1 trillion

In a year of good things, the fund industry has ushered in a new milestone.

According to data aggregated by Bloomberg, global exchange-traded products (TTPs) will receive just over $1 trillion in inflows in 2021. Investors added $3.9 billion in October, pushing the total amount above that mark.

Although two months before the end of the year, ETP's full-year inflows exceeded $1 trillion for the first time this year. Stock markets have hit new highs and commodity prices have soared, helping ETP suck up more than 30 percent more money this year than last year's record level. An ETP is a security that can track the performance of stocks, bonds, commodities, or currencies.

"Although it is a new record, I am not surprised," said Liz Young, head of investment strategy at SoFi. "One, we've been through the New Wave — there's no other choice — so people are hungry for stocks. Second, we have a lot of new investors, and people are very cost sensitive. So when they invest on their own, and on a platform that's trying to save commissions, ETFs are a lot cheaper than mutual funds. ”

Equity funds account for the largest share of global ETP funding flows. More than $735 billion has flowed into ETFs so far this year, of which U.S. funds account for $540 billion. Historicly low interest rates have also forced many investors to rethink their traditional 60/40 equity bond allocation strategy and allocate more to stocks. As a result, inflows from fixed income funds so far in 2021 are slightly less than $234 million.

The S&P 500 recorded its best six-year year-over-year performance in October, and some strategists expect strong U.S. corporate earnings to drive U.S. stocks to continue to rally until the end of the year. This could lead to more money inflows.

This article originated from the Financial Circle Network