Passive investing is taking a bigger share of the stock market, helping to drive gains.

Exchange-traded funds, or ETFs, owned nearly 6 percent of the U.S. stock market as of the end of the first quarter, their greatest share on record, according to analysis by Goldman Sachs.

Known as passive investments, ETFs are baskets of stocks tracking various market indexes and have grown in popularity for their relatively low fees. In contrast, mutual funds that involve higher-cost active stock picking have declined in popularity, and their ownership of the U.S. stock market has fallen to 24 percent, the lowest since 2004.

ETFs purchased $98 billion worth of stocks in the first quarter, putting them on pace to buy $390 billion of stock this year, more than the last two years’ combined total of $362 billion, according to the Friday note by a group of analysts led by Goldman’s chief U.S. equity strategist, David Kostin. Goldman based its analysis on the Federal Reserve Board’s June 8 report on first-quarter U.S. financial accounts.

ETF ownership of equities is at the highest level on record, as of the first quarter

Source: Federal Reserve Board and Goldman Sachs Global Investment Research.

Analysts said the growth of ETFs can help explain why stocks have gained this year despite delays in passing the Trump administration’s pro-growth proposals and increased geopolitical worries.

“I agree that ETFs have been a big driver,” Ilya Feygin, managing director and senior strategist at WallachBeth Capital, told CNBC in an email. “The market has often made strong gains in weeks of strong inflows even in the face of bearish macro news. It has paused when there is not much inflow or the inflow went to international ETFs instead of U.S.”

In a sixth straight quarter of gains, the S&P 500 climbed 5.5 percent in the first quarter to record highs. The index is tracking for gains of more than 3.5 percent this quarter.

Corporate buybacks and foreign investors also have driven demand for U.S. stocks.

Share buybacks were still the largest source of demand for stocks in the first quarter at $136 billion, or 46.6 percent of purchases, the Goldman report said, while the first quarter marked the second time in the last eight quarters that foreigners bought more U.S. stocks than they sold.

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