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Data Insights/2023: The Year in U.S. ETPs - Part 3

2023: The Year in U.S. ETPs

Part 3 - Global equity markets

Steven W. Poser

Director of Research

February 1, 2024

2023 was an extraordinary year in global equity markets, with U.S. markets out-performing most foreign markets and a small group of technology stocks, as evidenced by the NYSE FANG+ Index, helping the S&P 500 rally more than 25%1 to at or near record levels depending upon the index. The broader index trailed substantially and did not show strong gains until the fourth quarter. The difference in returns between the S&P 500, which is market capitalization-weighted, and its equal-weighted version was the largest ever. The small cap S&P 600 was down through the first three quarters of the year, before rallying 16% in the fourth quarter.

Chart 1: U.S. Equity Index Performance2

Given the wide range of returns in the U.S. equity market, we review the flows and performance of the many ETP equity market categories.

Equity Returns

Several narrow thematic equity ETPs led the way in returns for 2023, including Blockchain, Next Generation Internet and Fin Tech, all returning more than 60% for the year and topping 25% gains in the fourth quarter. However, despite this strong performance, the latter two suffered outflows for the year.

For broader based products, U.S. Info Tech, Communications, Consumer Discretionary and Large Cap Growth all returned more than 40% in 2023. However, in Q4 Communications returns of 11.1% and Large Cap Growth at 12.9% trailed Info Tech and Small Cap stocks as the rally broadened on expectations of the Fed pausing and possibly starting to lower rates in 2024.

Chart 2a: Top 5 Thematic Equity ETP by 1-year Return3

Chart 2b: Bottom 5 Thematic Equity ETP by 1-year Return

Despite strong returns for the year, three of the top five narrow groups -- Next Generation Internet, Fin Tech, and Multi-Trends -- saw outflows in 2023. Conversely, two of the bottom five saw inflows: Cannabis and Tomorrow’s Treatments. Only the Multi-Trends ETPs were in the top five by AUM, and none of the narrow-themed products account for more than 0.52% of total Equity AUM for U.S.-based ETPs.

Broader ETPs, while offering less targeted choice, provide greater diversity and still can offer strong returns. All of the top five broader groups had full year inflows while four of the bottom five had outflows (“uncategorized” had small inflows). Consumer discretionary suffered a small outflow during the last quarter of 2023.

Chart 3a: Top 5 Broad Equity ETP by 1-year Return

Chart 3b: Bottom 5 Broad Equity ETP by 1-year Return

Leveraged and Inverse Products

Leveraged and inverse ETPs are generally employed as short-term tools, allowing investors to either hedge or amplify returns when they expect a significant market move. Their design makes them less well suited as long-term investments because their returns are geometric. For example, the S&P 500 SPDR ETF (SPY) gained 25.83% for the year, while a 2X bull ETP gained just 46.34%, well below two times the return of the non-leveraged ETP .

Much like overall stock market activity, volume in leveraged and inverse ETPs increase when the market falls and decrease when the market rallies. The correlation between the change in volume and the change in SPY price was -0.17 for leveraged and -0.18 for inverse; volume rose when prices dropped. There was a very strong 94% correlation between leveraged and inverse volumes, as price direction had the same impact whether the products were bull or bear focused.

Chart 4: Leveraged and Inverse ETP Volume in Millions vs. SPY
(5-day moving average)

Foreign Stocks

Foreign stocks were mixed in 2023. The smallest emerging markets -- frontier exchanges -- only managed single digit gains, while Latin America, Mexico and North America (which includes the U.S.) ETPs returned more than 30%, ahead of U.S. stocks.

Most global stock markets under performed U.S. equities in 2023, with returns between 10% and 20%. Multiple geographies had fund outflows in 2023, led by $664 bn exiting the U.K. and $581 bn leaving the combination of China and Hong Kong. When measured as a share of year-end AUM however, Germany at -33% and Frontier Emerging Markets at -25% experienced the largest outflows.

Non-U.S. Equity Market ETP Flows, AUM and Returns

Geographical FocusFlow ($mn)AUM ($mn)Wtd 3-mo ReturnWtd Q1-Q3 ReturnWtd Return 1yr
Other Developed$40,158.6$524,696.210.6%5.6%16.8%
Emerging Mkts.$14,028.9$241,409.77.5%2.5%10.2%
Developed Europe$3,348.8$40,747.012.1%6.6%19.6%
North America


China/Hong Kong


Developed Pacific$126.1$10,629.310.2%2.7%13.2%


South Korea$761.9$4,638.214.2%3.8%18.5%
Asia/Asia Pacific






Latin America$657.3$2,003.417.1%12.6%31.8%


Emerging Frontier





  1. Based on the S&P 500 Index
  2. Source: NYSE Research
  3. All flow, return and AUM data source Track Insight
  4. Consider a 2X leveraged bullish equity fund. If the stock market rises and falls 1% for 50 consecutive days, the fund will lose 1% of its value. Without leverage it would lose 0.25%. Your losses are 4X. The way to look at this is each day the value of the fund rises or falls by the index multiplied by its leverage factor. One day down 2% (1% time two) means the fund falls 2%, then if it rises 2%, instead of being down 0.01%, you will be down 0.04%: 100*.98*1.02 = 99.96. If there is a very large move this can lead to very large losses.
  5. SPY has an expense ratio of 0.10%, the 2X ETP 0.75%. The return difference is far larger than the expense difference. Leveraged funds tend to have somewhat higher expense ratios as they are more complex and costly to manage.
  6. Track Insights geographical categories include several combination categories, including North America, which includes the U.S., Asia, Asia Pacific, Developed Markets and others. An ETP can only be included in one group.Due to the large number of groups, we present the summary data in tablular format.
  7. We limited data to geographical categories with at least three ETPs.Returns are AUM weighted by ETP symbol.

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