ETFs are well on their way to $1 trillion in net inflows in 2024.
It has been a blowout year for exchange-traded funds (ETFs) in the United States, as they have already passed the annual record for net inflows.
According to a new report from ETFGI, a London-based research and consultancy firm, the U.S. has recorded $861.4 billion in net inflows into ETFs this year through October 31.
Inflows have already surpassed the previous full year high of $732.7 billion set in 2021. Assuming there aren’t a massive amount of outflows over the next two months, it will almost certainly be a record year for ETFs.
In October alone, ETFs had $120.6 billion in inflows, according to ETFGI. It is the 30th consecutive month that U.S. ETF have reported inflows. Considering that November and December typically have higher than average totals, it is likely that net inflows for 2024 will top $1 trillion.
Analysis by Matthew Bartolini, head of SPDR American Research at State Street Global Advisors, said ETF inflows have already surpassed $1 trillion over a rolling 12-month period ended October 31. He projects that net inflows will end calendar year 2024 at $1.091 trillion.
Overall, ETF assets under management in the U.S. are nearing the $10 trillion mark, the ETFGI report said. At the end of October AUM was at $9.98 trillion, so they are heading to $10 trillion and may in fact be there already.
ETF assets in the U.S. have climbed 23% this year so far, up from $8.11 trillion at the end of 2023.
Equity and active ETF assets soar
Of the $120.6 billion in net inflows in October, more than half, $62.4 billion, flowed into equity ETFs, bringing the year-to-date total to $400.2 billion. That’s about a 166% increase over the approximately $150 billion gathered in all of 2023.
Fixed income ETFs had $16.6 billion in inflows in October and recorded $161.7 billion YTD through October. That’s significantly higher than the $129.5 billion in 2023.
Also, actively managed ETFs are on the rise, attracting net inflows of $32.7 billion in October and $239.4 billion YTD through October. That is about 137% more than the $101.3 billion gathered in all of 2023.
Finally, commodities ETFs had $3.52 billion in net inflows in October, bringing the year-to-date total to $3.51 billion. Last year, commodities ETFs had $9.2 billion in net outflows.
Overall, there are 3,826 ETFs and exchange-traded products (ETPs) in the U.S. from 348 providers listed on 3 exchanges. That’s up from 3,381 in 2023.
The Vanguard S&P 500 ETF (NYSEARCA:VOO) continues to be the hottest ETF on the market, bringing in $14.4 billion in net new assets in October and $85.6 billion for the year. The $85.6 billion in inflows is already a record for a calendar year and, on this pace, it could crack $100 billion in new assets in calendar year 2024.
The Vanguard S&P 500 ETF is the third largest ETF with total AUM of $537.6 billion, just shy of the second largest iShares Core S&P 500 ETF (NYSEARCA:IVV) which has $538.4 billion. The iShares Core S&P 500 ETF had $10.5 billion in inflows in October, and $55.9 billion YTD, second on both counts. The SPDR S&P 500 ETF (NYSEARCA:SPDR) is the largest with more than $590 billion in assets.
The third fastest growing ETF in the U.S. this year is the iShares Bitcoin Trust (NASDAQ:IBIT), one of the first spot Bitcoin funds, released this past January. It had $4.6 billion in inflows in October, fourth overall, and has $26.1 billion YTD, third overall.
More money flowing into value than growth ETFs
Finally, Vanguard, citing Morningstar research, had a breakdown of where equity ETFs were flowing in the third quarter. It revealed that $91 billion went into large-cap blend funds, which would suggest the massive inflows into the S&P 500 funds. But more went into large-cap value, $15.5 billion, than large-cap growth, $11.9 billion.
Mid-caps saw mostly outflows, as mid-cap value ETFs had $1.6 billion in outflows and mid-cap growth had $4.2 billion in outflows. Only mid-cap blend had inflows, with $2.7 billion coming in.
Small-caps have had quite a resurgence, as $11.7 billion flowed into small-cap blend funds, while small-cap value funds saw $3.8 billion in net inflows. Small-cap growth ETFs lagged with $1 billion in net new assets.
In Vanguard’s ETF Industry Perspectives Q3 2024 newsletter, Vanguard experts said the lower cost of capital after rate cuts has generated more interest in small-cap stocks.
Overall, small-cap stocks had $16.5 billion in net inflows in Q3, which was significantly more than the $9.4 billion that flowed into small-cap in the first six months of the year.
