US ETFs have raked in $437B so far in 2024

The US ETFs market saw significant inflows in the first half of 2024, with June alone seeing $81 billion in new investments, according to a new report by National Bank of Canada.

Year-to-date, total net flows have reached $437 billion, positioning 2024 to potentially surpass the $610 billion in 2022 and $597 billion in 2023. This year’s performance is also on track to challenge the record $946 billion set in 2021, the report noted.

June saw US-focused ETFs continuing to lead in the equity ETF categories, taking in around $37 billion year-to-date to reach approximately $5.6 trillion in AUM. International and global ETFs also witnessed substantial demand, with $14.2 billion in inflows, marking the category’s highest monthly figure since January 2022.

Through a sector lens, tech-sector ETFs have been the top-grossing category in 2024, drawing in $12.7 billion year-to-date. Industrials followed far behind with $2.7 billion, but the broader sector ETF space experienced net outflows of almost $10 billion.

While the inflows into tech ETFs might be explained by the sector’s performance, the report noted that the communication sector has performed similarly to tech, it has still faced net outflows of $1.1 billion year-to-date.

Growth factor ETFs have dominated factor ETF inflows in June, attractive $12.2 billion, with US large-cap growth seeing the highest demand. Growth, value, and quality factor ETFs led in inflows for the year, while defensive factors such as dividend/income and low volatility lost momentum.

“Outflows from defensive factors do not necessarily indicate that investors are no longer seeking protection or certainty. They may be shifting towards derivative-based ETFs for more measurable outcomes despite added complexity,” the report said.

National Bank made note of substantial interest in fixed income ETFs as they gathered $117 billion in the first half of 2024, with June contributing $25.3 billion. This aligns with increased market expectations of Federal Reserve cuts by year-end, the report said.

Meanwhile, the multi-asset ETFs category has been growing steadily, reaching $171 billion in AUM by the end of June. These ETFs, which include various investment products such as option strategies, alternatives, asset allocation, and private equity investments, have accumulated $30 billion year-to-date, with option-strategy ETFs alone accounting for about 90 percent of these inflows.