Record Year for U.S. ETFs: Billions in Inflows and New Trends

U.S. exchange-traded funds (ETFs) reached a significant milestone in 2024. Assets surged by an impressive 28% to a total of $10.36 trillion. This development was driven by both a market recovery and net inflows of $1.12 trillion, according to a new report from CFRA. This record marks a shift in how investors access the markets. Growth themes and active investment strategies are increasingly shaping the ETF landscape, which has been dominated by indices, explains Aniket Ullal, Head of ETF Research at CFRA. In the booming ETF landscape, the Hashdex Bitcoin Futures ETF stood out with a stunning return of 109.4%. Technology-oriented funds also excelled: the Roundhill Magnificent Seven ETF achieved 62.7% and the Defiance Quantum ETF impressed with 50.4%. Active ETF strategies proved to be a true magnet for investor funds, increasing their share of total inflows to 24.6%, compared to 14.6% in 2022. In contrast, smart-beta products lost appeal, reflected in a decline in inflows from 18.7% to 7.7%. Industry leaders Vanguard and BlackRock confirmed their dominant position, capturing 53% of all ETF inflows in 2024. The Vanguard S&P 500 ETF led the inflow rankings with $115.1 billion, followed by the iShares Core S&P 500 ETF with $86.5 billion and the iShares Bitcoin Trust, which raised $37.5 billion in its first trading year. JPMorgan also solidified its position in the active ETF segment, attracting a remarkable 3.9% of total fund inflows despite a comparatively small asset share of 1.6%. The active ETF world grew continuously, with Dimensional Fund Advisors and Capital Group standing out due to higher-than-expected inflows. Additionally, the Global X MSCI Argentina ETF shone with a return of 61.6%, inspired by Argentine President Javier Milei's reform agenda. The VanEck Video Gaming and eSports ETF completed the year’s successful standouts as the fifth strongest product. Despite the changing investment strategies, classic index-based ETFs remained highly popular, with annual inflows rising by 89% to $759.3 billion in 2024. For the coming year, CFRA projects ETF inflows between $500 billion and $1 trillion, with a possible increase if the Securities and Exchange Commission approves ETF classification as a share class for mutual funds.