For the sake of simplicity and accessibility, ETFs appear to be an obvious solution for many novice or time-pressed investors. With geopolitical tensions making the market increasingly difficult to understand and AI no longer a surefire answer, it seems logical to turn to the simplest option the markets have to offer: ETFs.
An easy solution
According to a recent article in the Wall Street Journal, ETFs have seen an inflow of $437bn since the beginning of the year. This growth suggests another record year, confirming the rise of these products. True stars of the markets and darlings of novice investors, ETFs are capturing the spotlight. At the same time, Europe recorded inflows of €105bn between January and April 2025, over double the €50bn over the same period last year. The trend is clear: ETFs are establishing themselves as the preferred gateway for newcomers.
There are two main reasons for this enthusiasm. First, there are more people who want to manage their savings better. Second, there is the instability caused by the global trade war launched by Donald Trump. With market visibility clouded, stock picking is becoming increasingly difficult. And in this uncertain environment, diversification remains the best defense. What could be simpler than buying an ETF that tracks a broad index composed of dozens or even hundreds of stocks? As a result, ETFs have become the asset that everyone is scrambling to buy. But like any easy solution, this one also has its limitations.
Just a spectator?
With the rise of ETFs, another trend is emerging: investors are becoming spectators. Individual stocks are taking a back seat, relegated behind the overall index. Attention is focused on average performance, that famous 7% annual return that is cited as a kind of automatic stockmarket income. For some purists, the stockmarket is turning into a passive, sanitized investment, like a savings account on steroids.
Moreover, this easy option is also intended to be a defensive position for most, with the second most popular ETF this year being none other than BlackRock's 0-3 month Treasury bond fund, which has recorded nearly $17bn in inflows. "We're seeing a defensive attitude toward fixed income," said Rosenbluth of VettaFi. "With several short-term Treasuries in the top 10, it's a sign that investors are happy to be paid to wait."
And so, all investors are rushing to ETFs like groupies.
Cartoon by Amandine Victor for MarketScreener
