2024 has been an exceptional year for the exchange-traded fund (ETF) industry, with numerous major milestones and records. Year-to-date flows into US-listed ETFs surpassed $1 trillion last week, according to Bloomberg data. The previous annual record was $903 billion, set in 2021.
ETFs have solidified their position as the investment vehicle of choice for many, thanks to their tax efficiency and low costs. Mutual funds have been losing assets to ETFs at an unprecedented rate.
US Outperformance & the "Trump Trade"
Over the past decade, the S&P 500 index has surged nearly 250%, largely driven by mega-cap tech giants.
By comparison, the MSCI index tracking large- and mid-cap non-US equities has returned just 59%. This divergence continues to widen, and the potential for continued pro-growth policies could further amplify US outperformance.
Investors have taken note of this outperformance, increasingly favoring US stock ETFs over their non-US counterparts. In November, 97% of equity inflows went into US equity ETFs, according to State Street.
The "Trump Trade" sent stocks soaring to their biggest monthly gains of the year in November. ETF flows have accelerated since the election, further propelling major indexes to a series of record highs.
Low-Cost ETFs Dominate the Flows
The S&P 500 index is up over 28% this year, recording 55 all-time highs, while the Nasdaq-100 has surged 30%.
The Vanguard S&P 500 ETF VOO, iShares Core S&P 500 ETF (IVV), Invesco QQQ QQQ, Vanguard Total Stock Market ETF VTI and SPDR Portfolio S&P 500 ETFSPLG collectively pulled in more than $235 billion in new money this year.
Blockbuster Bitcoin ETF Launches
A significant highlight this year was the launch of the first spot Bitcoin ETFs, after a decade-long wait. These ETFs have been incredibly popular among investors.
The iShares Bitcoin Trust IBIT alone has amassed over $50 billion in assets, making it the most successful ETF launch in history. With a crypto-friendly administration, the market could witness further innovation in this space.
Active ETFs & Product Innovation
ETF providers continue to innovate with a surge in actively managed ETFs and derivative-based strategies.
Leveraged single-stock ETFs tracking popular names like NVIDIA NVDA, Tesla TSLA, and MicroStrategy MSTR have gained traction, along with options-based ETFs designed to deliver defined outcomes or enhanced income.
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Tesla, Inc. (TSLA) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
MicroStrategy Incorporated (MSTR) : Free Stock Analysis Report
Vanguard Total Stock Market ETF (VTI): ETF Research Reports
Vanguard S&P 500 ETF (VOO): ETF Research Reports
SPDR Portfolio S&P 500 ETF (SPLG): ETF Research Reports
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