August’s market volatility did little to deter investors, who poured a staggering $75 billion into U.S. exchange-traded funds (ETFs) during the month. This represents a fivefold increase compared to the same period last year, demonstrating the growing appeal of ETFs as an investment vehicle. According to Bloomberg data, these robust inflows have propelled the year-to-date total to over $600 billion, putting 2024 on track to potentially eclipse the all-time record of $911 billion in inflows, set in 2021 – a year before the Federal Reserve embarked on its rate hike cycle.
Analysts attribute the surge in ETF demand to a confluence of factors. Athanasios Psarofagis, an ETF analyst at Bloomberg Intelligence, highlights that investors took advantage of the early August market dip to bolster their equity ETF holdings. The anticipated start of the Federal Reserve’s rate cuts further fueled investor enthusiasm, leading to a noticeable uptick in demand for bond-related ETFs and small-cap ETFs.
The total value of ETFs continues to soar, nearing the $10-trillion mark, representing almost one-third of the total value of all investment funds in circulation. Passive ETFs, with their low-cost and transparent structure, dominate this space, holding $8.7 trillion in assets. Actively managed ETFs have also seen significant growth, with their assets increasing by 30% this year to $783 billion.
Both fixed-income and equity ETFs have attracted significant inflows in 2024. Fixed-income products have garnered $187 billion, while equity ETFs have seen $367 billion flow into their coffers. Todd Sohn, an ETF strategist at Strategas, attributes the robust inflow into bond ETFs to the emergence of a wide range of new offerings, including actively managed funds. Bond ETFs have attracted $100 billion over the past three months, surpassing the inflows observed during the early pandemic-recovery period in 2020.
Bitcoin-based ETFs have also gained momentum, with net inflows exceeding $17 billion so far this year. Leveraged and inverse funds based on single companies have accumulated more than $9 billion in assets.
Top 5 ETFs by Inflows in August 2024:
| Fund | Fund Flows in August 2024 |
|—|—|
| Vanguard S&P 500 ETF (VOO) | $5.964 billion |
| Vanguard Information Tech ETF (VGT) | $3.906 billion |
| iShares 20+ Year Treasury Bond ETF (TLT) | $3.038 billion |
| iShares Core S&P 500 ETF (IVV) | $2.49 billion |
| Vanguard Total Stock Market ETF (VTI) | $2.358 billion |
Year-to-Date ETF Inflow Leaders:
| Fund | YTD Fund Flows |
|—|—|
| Vanguard S&P 500 ETF (VOO) | $60.648 billion |
| iShares Core S&P 500 ETF (IVV) | $43.532 billion |
| Vanguard Total Stock Market ETF (VTI) | $21.098 billion |
| Invesco QQQ Trust, Series 1 (QQQ) | $19.329 billion |
| iShares Core U.S. Aggregate Bond ETF (AGG) | $14.152 billion |
