Monthly Derivative Strategy ETF Commentary

The Global X Research Team is pleased to announce the December 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 – December 2023 Key Takeaways

• With a 69% organic growth rate, U.S. listed, derivative strategy ETFs had another strong year with net new assets totaling $43B.¹ With $592B in ETF industry flows for 2023, aggregate flows into derivative strategy ETFs represented 7% of new money flowing into the market.² Growth was primarily driven by Derivative Income & Risk Management ETFs, as investors sought different option payoff structures for income and volatility mitigation.
• Risk Management ETF flows remained steady, with monthly inflows totaling $1.1B in net new assets as major U.S. equity market indices recovered a significant level of losses incurred during the prior year of 2022.³ A level of collar ETF strategies rolled their options portfolios during the end of December as investors embrace their portfolios for a potential slowing down in U.S. economic growth throughout 2024.
• Ending the year with $28B in net new assets, Buywrite strategies accounted for 65% of all flows into all Derivative Strategy ETFs.⁴ Outpacing other overlays significantly, it’s likely that other income-oriented strategies outside of the Buywrite landscape will continue to come to market for landscape differentiation. With interest rates likely peaking, investors may be well equipped to maintain portfolio income streams with the enhancement of selling optionality via the ETF wrapper.