The growth of ETF usage among active managers largely comes from broad equity market funds. In one year, mutual and hedge funds doubled their holdings of the SPDR S&P 500 ETF to $24 billion, according to a Goldman analysis of 13F filings.
Still, it’s unlikely the large bid for ETFs among active managers will last, Gayle said, noting that managers may ditch the funds for individual names once there’s more clarity from Washington.
“I don’t think it’s an abdication of stock picking prowess to buy ETFs in this environment,” he said. “This is a story that’s not permanent. As soon as we get some resolution or clear lack of resolution to the macro policy, it will settle down and turn into a stock picker’s market.”
This story was provided by Bloomberg News.