The ETF Show - 2023 ETF Outlook & Precious Metals

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  • 05 mins 15 secs
James Seyffart, CFA, CAIA, ETF Research Analyst for Bloomberg Intelligence shares a recap of ETF trends in 2022 and what to expect in 2023, followed by Ed Coyne, Senior Managing Director of Global Sales for Sprott doing the same for precious metals related to the energy transition.
Channel: ETF
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Jonathan Forsgren:       Welcome to this edition of The ETF Show. I'm here with James Seyffart, ETF research Analyst with Bloomberg Intelligence. James, thanks for joining us today.

James Seyffart:             Yeah, thanks for having me. Happy to be here.

Jonathan Forsgren:       We are wrapping up 2022. What were some trends that we saw in the ETF space this year?

James Seyffart:             Yeah, the big trend that we saw in the ETF space was inflows despite horrible performance. We saw massive outflows from the mutual fund space. There's a possibility we could hit a trillion outflows of mutual funds and we're looking at roughly $550 to $600 billion in inflows for ETFs, possibly more. So, those are the two main trends that we're watching.

Jonathan Forsgren:       And why did the ETF space get so much interest when everything else was doing so poorly? The IPO market was pretty much absent. Why did ETF get so much inflows?

James Seyffart:             Yeah, in bad times a lot of investors tend to turn to ETFs. We'd like to think of 2008 as the time where ETFs really showed their worth. A lot of institutions went there because there's liquidity, a lot of things tend to trade in line. So, they were just looking for liquidity to trade out of positions or hedge different positions. And I think people are seeing that ETFs they can do that with. And more specifically, fixed income ETFs. A lot of people were skeptical of fixed income ETFs and this year has been a banner year for them, despite the horrible performance. We are at record bad performance for bonds. We have seen massive outflows from bond mutual funds and still bond ETFs have taken in significant money. Treasury ETFs have had their best year ever. So, those are the trends that we're seeing here.

Jonathan Forsgren:       And then, going into 2023, what are some of the things that you expect to see in the ETF space in the new year?

James Seyffart:             Yeah, one of the things we like to track is both how big are ETFs compared to mutual funds and how big is passive compared to active. Passive compared to active, there's a possibility, we could see passive funds, including mutual funds in ETFs, pass mutual funds and assets by December 2023. That would be a little bit aggressive, but it's going to happen in 2024 as far as we're concerned.

                                    Now, ETFs, they are much smaller in comparison to mutual funds, but we think that's going to happen by 2027, 2028. So, there's a big trend of towards passive, towards ETFs, towards low cost. And the other thing is, we saw over 400 funds launched this year. We've seen 750 something filings for ETFs this year. So, we expect a lot of new funds to come out in 2023. But we also expect a huge uptick in liquidations and closings of ETFs because there's been so many launched and not many have closed in 2022 and 2021 despite the bad performance, and they're low in assets, so we expect to see a huge uptick in liquidations of ETFs.

Jonathan Forsgren:       Well, James, thank you so much for joining us and sharing your expert insights.

James Seyffart:             Thanks for having me. Happy to be here.

Jonathan Forsgren:       And I hope we'll be talking in 2023 and going over some of these trends.

James Seyffart:             Yeah, I'm looking forward to it.

Jonathan Forsgren:       For Asset TV, I'm Jonathan Forsgren. We'll see you next time.

Jenna Dagenhart:          Joining us now to talk about how gold has been doing, and share his outlook for 2023 is Ed Coyne, Senior Managing Partner, National Sales, at Sprott Asset Management. Ed, great to have you with us. How did Gold ETF's Fair in 2022, and what's your outlook for 2023?

Ed Coyne:                     It's been really interesting year, time and time again all year I go, "Well, why didn't gold do better?" If you look at gold, gold is a relative asset, right? So, when you think about its role in a portfolio, it doesn't pay a dividend, it doesn't have earnings, it doesn't have an absolute return. It's relative to the rest of your portfolio. And so, when you think about gold from a return pattern standpoint, this year it did quite well. Effectively, we have still another week and a half left in the year, but it's effectively flat for the year. And the S&P is off high-teens for the year. So, that differential has been substantial. Silver, same thing. Silver's actually done a little bit better, silver's more of a consumer metal, and it's starting to apply to other things in the market, like energy transitions with cars, solar panels, cell towers, all those things. So, you're seeing things like silver and uranium and different metals start to get more attention also.

Jenna Dagenhart:          And then, how are you preparing for the energy transition?

Ed Coyne:                     Metals and mining in general is a big part of it. It always has been, it will continue to be so. And for better or worse, you got to pull things out of the ground to make machinery work. We started getting into the energy transition market a little over two years ago with uranium. We've raised over $3 billion in physical uranium. We've raised over a billion through some acquisitions in uranium equity, ETF, and you're seeing us do that in other metals as well. So, you should expect in 2023 to hear the narrative of Sprott continue to ring true with other metals like copper, and lithium, and cobalt, and nickel.

Jenna Dagenhart:          And that wraps it up for The ETF Show. Thanks for watching and we'll see you soon. I'm Jenna Dagenhart, with Asset TV.

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