ETF Prime: Murphy on Explosive Growth of Crypto-Related ETFs

Murphy highlighted the surge in crypto-related ETFs, noting that 10 of the top 20 ETF launches in 2024 were tied to digital assets. This marks a pivotal moment, driven by the emergence of a new asset class, years of regulatory buildup, and strong pent-up investor demand.

While not widely anticipated, mortgage-backed securities ETFs have gained traction among income-focused investors. Murphy attributes this success to the reputation of issuers like JPMorgan, the relatively high yields offered compared to Treasuries, and favorable market timing.

She also noted this trend reflects a growing willingness among investors to go beyond traditional bonds in pursuit of yield, even revisiting complex fixed income products like the iShares MBS ETF (MBB A).

Murphy pointed to distribution and model portfolios as major drivers of ETF flows, particularly for active and thematic strategies. She noted many of today’s top inflow ETFs aren’t broad-market trackers, but instead are products with specific themes or active management. Influencer-driven funds have also found their footing, with Murphy citing Tom Lee’s GRNY as a standout example of how media presence and compelling storytelling can help thematic ETFs resonate with retail investors.

Following Murphy’s insights, Tom Lee joined the podcast to share the story behind the fund’s remarkable growth. In just nine months, the ETF has become one of the top five new launches by inflows, surpassing $2 billion in assets. Lee credits this success to the thematic, evidence-based approach rooted in his original research portfolio, combined with the ETF wrapper that simplifies investing by making rebalancing and tax efficiency easier for clients.

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