The Global X Research Team is pleased to announce the October 2023 release of the Derivative Strategy ETF Report, in which we seek to examine the continuous growth of derivative-oriented strategies implemented within the ETF structure. The key takeaways below, as well as those highlighted within the report, recap Global X’s classification system for the derivative strategy ETF landscape. They also provide industry-level analysis of derivative strategy ETF investing through an investigation of changes in assets under management (AUM) and fund flows that signify potential trends.
Derivative Strategy ETF Landscape – October 2023 Key Takeaways
- Assets under management (AUM) of U.S. listed, derivative strategy ETFs rose to $98.75B at the end of October 2023, representing a 1-year growth rate of 72.77%.1 This substantial level of appreciation has been largely supported by strong investor sentiment and interest in covered call strategies. Specifically, the buywrite funds continue to lead the category with approximately $57B in assets.1
- Monthly inflows for the entire derivative ETF strategy landscape increased from $3.56B in September to approximately $4B in October.2 This increase was likely the result of a change in investor sentiment as investors potentially anticipate an indefinite halt in the Federal Reserve’s rate hiking cycle.
- Derivative strategy ETFs have experienced a substantial uptick in year-to-date net new assets, amassing $36.6B in new assets since January 1st reflecting a noteworthy 52.5% growth rate.3 This increase coincides with heightened volatility in the fixed income market, likely driven by rising long-term treasury yields. Concurrently, the stock market's recent gains, predominantly fueled by mega-cap technology companies, may reveal a lack of overall market breadth in the eyes of investors. The growing adoption of collar and buy-write strategies suggests that investors are actively pursuing methods to mitigate volatility while simultaneously boosting income potential.
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