ETF flows on track to hit record above $1 trillion by year-end, VettaFi data shows

Thursday at 11:27 AM

Investors poured more than $915 billion into exchange traded funds in 2024 as of Wednesday, hitting a fresh record, according to VettaFi. Inflows are on track to hit the $1 trillion milestone by year-end, as the election acts as a new catalyst, the firm found. “We’ve seen an acceleration in the demand for ETFs and the use of ETFs in the past week,” said Todd Rosenbluth, head of research at VettaFi. “The majority of flows continued to be index based,” he added. “ETFs are becoming a preferred way to get exposure to the stock market. You can get diversification benefits as opposed to buying a single stock.” Indeed, the past week has been a strong one for stocks, with the broad market S & P 500 up nearly 1% over the last five trading days through Wednesday. Investors’ enthusiasm over President-elect Donald Trump’s win last week powered the three major averages to fresh highs on Monday. However, the rally has been losing some steam in recent days. Investors have been eager to partake in stocks’ recent run higher. ETFs have seen inflows of more than $58 billion since Election Day, according to State Street Global Advisors. Of that sum, more than $48 billion went toward U.S. equities. State Street’s popular SPDR S & P 500 ETF Trust (SPY) has seen more than $12 billion of new money, since the Nov. 5 election. The Invesco QQQ ETF (QQQ) , which tracks the tech-heavy Nasdaq 100 index, has picked up more than $8 billion of inflows since Election Day. “The type of user in the world of ETFs has really expanded,” said Ryan McCormack, senior factor and core equity strategist for Invesco’s exchange traded funds. “You have, of course, your institutional investors, financial advisors, [registered investment advisors] down to the individual investor. We just see a wider base of people using the instrument.” ETF flavors garnering notable flows The ETFs that track indexes have seen the biggest dollar inflows. However, McCormack said there is growing interest in “factor ETFs” that use fund specific rules or strategies to try and improve portfolio performance. The Invesco S & P 500 Momentum ETF (SPMO) is made up of 100 stocks the firm rates as having the highest “momentum score” in the S & P 500, its inflows have jumped 25% post election and more than 1100% year to date. The Invesco S & P 500 Equal Weight ETF that mirrors the stocks of the market cap weighted S & P 500 has seen inflows increase more than 24% year to date “This sort of alternatively weighted strategy is an easy way to pick up some level of small size exposure from the factor perspective and naturally diversify,” said McCormack. Investors are also turning to ETFs to capitalize on so-called Trump Trades such as bitcoin. “Large flows into Bitcoin ETFs reflects the sizeable optimism towards the industry, as the crypto industry prepares for a more crypto-friendly administration and easing regulatory headwinds,” said Anna Paglia, chief business officer of State Street Global Advisors. “But that optimism will extend to the entire ecosystem, as this sentiment shift goes beyond spot.” State Street said its SPDR Galaxy Digital Asset Ecosystem ETF (DECO) has seen inflows increase by 26% since Election Day. Top holdings in the DECO ETF include bitcoin-related stocks Cipher Mining, Riot Platforms and Terawulf. Overall, Rosenbluth believes the post-election surge and likely crossing of the $1 trillion milestone is a long term tailwind for the ETF industry. “I think demand could further accelerate if we cross that key milestone and as asset managers see that adoption they are likely to continue to bring new products to market.”

Specialist traders work inside a post on the floor at the New York Stock Exchange on Oct. 23, 2024.

Brendan McDermid | Reuters

Investors poured more than $915 billion into exchange traded funds in 2024 as of Wednesday, hitting a fresh record, according to VettaFi. Inflows are on track to hit the $1 trillion milestone by year-end, as the election acts as a new catalyst, the firm found.

“We’ve seen an acceleration in the demand for ETFs and the use of ETFs in the past week,” said Todd Rosenbluth, head of research at VettaFi.

“The majority of flows continued to be index based,” he added. “ETFs are becoming a preferred way to get exposure to the stock market. You can get diversification benefits as opposed to buying a single stock.”

Indeed, the past week has been a strong one for stocks, with the broad market S&P 500 up nearly 1% over the last five trading days through Wednesday. Investors’ enthusiasm over President-elect Donald Trump’s win last week powered the three major averages to fresh highs on Monday. However, the rally has been losing some steam in recent days.

Investors have been eager to partake in stocks’ recent run higher. ETFs have seen inflows of more than $58 billion since Election Day, according to State Street Global Advisors. Of that sum, more than $48 billion went toward U.S. equities.

State Street’s popular SPDR S&P 500 ETF Trust (SPY) has seen more than $12 billion of new money, since the Nov. 5 election. The Invesco QQQ ETF (QQQ), which tracks the tech-heavy Nasdaq 100 index, has picked up more than $8 billion of inflows since Election Day.

“The type of user in the world of ETFs has really expanded,” said Ryan McCormack, senior factor and core equity strategist for Invesco’s exchange traded funds. “You have, of course, your institutional investors, financial advisors, [registered investment advisors] down to the individual investor. We just see a wider base of people using the instrument.”

ETF flavors garnering notable flows

The ETFs that track indexes have seen the biggest dollar inflows. However, McCormack said there is growing interest in “factor ETFs” that use fund specific rules or strategies to try and improve portfolio performance.

The Invesco S&P 500 Momentum ETF (SPMO) is made up of 100 stocks the firm rates as having the highest “momentum score” in the S&P 500, its inflows have jumped 25% post election and more than 1100% year to date. The Invesco S&P 500 Equal Weight ETF that mirrors the stocks of the market cap weighted S&P 500 has seen inflows increase more than 24% year to date

“This sort of alternatively weighted strategy is an easy way to pick up some level of small size exposure from the factor perspective and naturally diversify,” said McCormack.

Investors are also turning to ETFs to capitalize on so-called Trump Trades such as bitcoin.

“Large flows into Bitcoin ETFs reflects the sizeable optimism towards the industry, as the crypto industry prepares for a more crypto-friendly administration and easing regulatory headwinds,” said Anna Paglia, chief business officer of State Street Global Advisors. “But that optimism will extend to the entire ecosystem, as this sentiment shift goes beyond spot.”

State Street said its SPDR Galaxy Digital Asset Ecosystem ETF (DECO) has seen inflows increase by 26% since Election Day. Top holdings in the DECO ETF include bitcoin-related stocks Cipher Mining, Riot Platforms and Terawulf.

Overall, Rosenbluth believes the post-election surge and likely crossing of the $1 trillion milestone is a long term tailwind for the ETF industry.

“I think demand could further accelerate if we cross that key milestone and as asset managers see that adoption they are likely to continue to bring new products to market.”

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