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Global ETF AUM Hits $11.7 Trillion: What's Driving the Surge?
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The global ETF market witnessed an unprecedented surge, with AUM reaching a record $11.7 trillion. This surge is attributed to investors reallocating funds from cash to equities and bonds, propelling the industry beyond its previous high of $11.6 trillion set in December 2023.
According to ETFGI's latest data report, January witnessed record inflows of $136.8 billion into global ETFs, surpassing the prior monthly record of $105.6 billion set in 2018. The U.S.-listed ETFs have seen inflows of $31 billion so far this year, with U.S. fixed income leading the way, pulling in $17.3 billion in assets, per etf.com. U.S. equity ETFs saw inflows of $14.5 billion, followed by $5.1 billion in international equity ETFs.
Vanguard S&P 500 ETF (VOO - Free Report) , iShares Core S&P 500 ETF (IVV - Free Report) , BlackRock's iShares Bitcoin Trust (IBIT - Free Report) , Vanguard Total Stock Market ETF (VTI - Free Report) and Invesco QQQ Trust (QQQ - Free Report) have been the top asset gatherers so far this year.
We have highlighted several reasons that led to the popularity and growth of the ETF industry:
Stock Market Rally
The global stock market has been on a superb rally over the past year. The blue-chip Dow Jones reached a new record high last week while the S&P 500 broke above 5,100 for the first time. The tech-heavy Nasdaq Composite Index also touched a new 52-week high. Strong corporate earnings, AI developments and renewed confidence in the tech sector have been the major drivers (read: 5 Technology Stocks Powering the S&P 500 ETF This Year).
Spot Bitcoin ETFs Launch
A notable factor contributing to inflows was the introduction of new products, especially spot bitcoin ETFs, following the SEC's approval of 10 new products based on bitcoin's spot price in mid-January. This development attracted a substantial number of crypto investors, significantly benefiting funds from major firms like BlackRock Inc. and Fidelity Investments.
Institutional Buying
Institutional investors, including pension funds and insurance companies, have increasingly turned to ETFs for both strategic and tactical asset allocation, leading to solid growth.
Key ETF Characteristics
The ETFs have unique strategies, creativity, transparency, diversification benefits, enhanced tax competencies, low turnover, and, of course, low costs that help to attract more capital to the ETF industry.
Innovation and Variety
The ETF market has seen a surge in innovation, with providers now offering products covering a broad range of asset classes, investment strategies and themes. These include smart beta ETFs, which use alternative index construction rules instead of traditional market cap weighting, and thematic ETFs that focus on emerging trends like technology, healthcare, or ESG (Environmental, Social, and Governance) factors.
Below, we have highlighted the top five asset gatherers so far this year:
Vanguard S&P 500 ETF topped the asset flow creation, pulling in $15 billion in capital. It tracks the S&P 500 Index and holds 505 stocks in its basket, each accounting for no more than 7.2% of the assets. Vanguard S&P 500 ETF is heavy on the information technology sector, while consumer discretionary, healthcare and industrials round off the next three spots with a double-digit allocation each (read: Should You Play S&P 500 ETFs on Bullish Analyst Bets?).
Vanguard S&P 500 ETF charges investors 3 bps in annual fees. It has AUM of $414.4 billion and trades in average daily volume of 4.5 million shares. VOO has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
iShares Core S&P 500 ETF has gathered $14.6 billion in assets. It tracks the S&P 500 Index and holds 503 stocks in its basket, each accounting for no more than 7.1% of the assets. iShares Core S&P 500 ETF is heavy on the information technology sector, while financials, healthcare and consumer discretionary round off its next three spots with a double-digit allocation each.
iShares Core S&P 500 ETF charges investors 3 bps in annual fees and trades in an average daily volume of 4.5 million shares. It has an AUM of $442.7 billion and a Zacks ETF Rank #1 with a Medium risk outlook.
iShares Bitcoin Trust raked in $5.9 billion in capital this year. It seeks to reflect the performance of the price of Bitcoin. It enables investors to access Bitcoin within a traditional brokerage account. The fund charges 25 bps in annual fees from investors. However, the fee is set to be 0.12% for the first 12 months or on the first $5 billion in assets.
Vanguard Total Stock Market ETF has accumulated $4.7 billion in capital. It provides exposure to the broader stock market by tracking the CRSP US Total Market Index. Vanguard Total Stock Market ETF holds a large basket of well-diversified 3,747 stocks with key holdings in technology, consumer discretionary, industrials, healthcare and financials.
Vanguard Total Stock Market ETF charges 3 bps in fees per year from investors and trades in an average daily volume of 3.3 million shares. VTI has amassed $374.3 billion in its asset base and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Invesco QQQ Trust saw an inflow of $4.3 billion this year. It provides exposure to the 101 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. Invesco QQQ is moderately concentrated on the top two firms with 8% share each, while other firms hold no more than 5.6% of the assets.
Invesco QQQ is one of the largest and most popular ETFs in the large-cap space, with an AUM of $250 billion and an average daily volume of 40 million shares. QQQ charges investors 20 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
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Global ETF AUM Hits $11.7 Trillion: What's Driving the Surge?
The global ETF market witnessed an unprecedented surge, with AUM reaching a record $11.7 trillion. This surge is attributed to investors reallocating funds from cash to equities and bonds, propelling the industry beyond its previous high of $11.6 trillion set in December 2023.
According to ETFGI's latest data report, January witnessed record inflows of $136.8 billion into global ETFs, surpassing the prior monthly record of $105.6 billion set in 2018. The U.S.-listed ETFs have seen inflows of $31 billion so far this year, with U.S. fixed income leading the way, pulling in $17.3 billion in assets, per etf.com. U.S. equity ETFs saw inflows of $14.5 billion, followed by $5.1 billion in international equity ETFs.
Vanguard S&P 500 ETF (VOO - Free Report) , iShares Core S&P 500 ETF (IVV - Free Report) , BlackRock's iShares Bitcoin Trust (IBIT - Free Report) , Vanguard Total Stock Market ETF (VTI - Free Report) and Invesco QQQ Trust (QQQ - Free Report) have been the top asset gatherers so far this year.
We have highlighted several reasons that led to the popularity and growth of the ETF industry:
Stock Market Rally
The global stock market has been on a superb rally over the past year. The blue-chip Dow Jones reached a new record high last week while the S&P 500 broke above 5,100 for the first time. The tech-heavy Nasdaq Composite Index also touched a new 52-week high. Strong corporate earnings, AI developments and renewed confidence in the tech sector have been the major drivers (read: 5 Technology Stocks Powering the S&P 500 ETF This Year).
Spot Bitcoin ETFs Launch
A notable factor contributing to inflows was the introduction of new products, especially spot bitcoin ETFs, following the SEC's approval of 10 new products based on bitcoin's spot price in mid-January. This development attracted a substantial number of crypto investors, significantly benefiting funds from major firms like BlackRock Inc. and Fidelity Investments.
Institutional Buying
Institutional investors, including pension funds and insurance companies, have increasingly turned to ETFs for both strategic and tactical asset allocation, leading to solid growth.
Key ETF Characteristics
The ETFs have unique strategies, creativity, transparency, diversification benefits, enhanced tax competencies, low turnover, and, of course, low costs that help to attract more capital to the ETF industry.
Innovation and Variety
The ETF market has seen a surge in innovation, with providers now offering products covering a broad range of asset classes, investment strategies and themes. These include smart beta ETFs, which use alternative index construction rules instead of traditional market cap weighting, and thematic ETFs that focus on emerging trends like technology, healthcare, or ESG (Environmental, Social, and Governance) factors.
Below, we have highlighted the top five asset gatherers so far this year:
Vanguard S&P 500 ETF (VOO - Free Report)
Vanguard S&P 500 ETF topped the asset flow creation, pulling in $15 billion in capital. It tracks the S&P 500 Index and holds 505 stocks in its basket, each accounting for no more than 7.2% of the assets. Vanguard S&P 500 ETF is heavy on the information technology sector, while consumer discretionary, healthcare and industrials round off the next three spots with a double-digit allocation each (read: Should You Play S&P 500 ETFs on Bullish Analyst Bets?).
Vanguard S&P 500 ETF charges investors 3 bps in annual fees. It has AUM of $414.4 billion and trades in average daily volume of 4.5 million shares. VOO has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
iShares Core S&P 500 ETF (IVV - Free Report)
iShares Core S&P 500 ETF has gathered $14.6 billion in assets. It tracks the S&P 500 Index and holds 503 stocks in its basket, each accounting for no more than 7.1% of the assets. iShares Core S&P 500 ETF is heavy on the information technology sector, while financials, healthcare and consumer discretionary round off its next three spots with a double-digit allocation each.
iShares Core S&P 500 ETF charges investors 3 bps in annual fees and trades in an average daily volume of 4.5 million shares. It has an AUM of $442.7 billion and a Zacks ETF Rank #1 with a Medium risk outlook.
iShares Bitcoin Trust (IBIT - Free Report)
iShares Bitcoin Trust raked in $5.9 billion in capital this year. It seeks to reflect the performance of the price of Bitcoin. It enables investors to access Bitcoin within a traditional brokerage account. The fund charges 25 bps in annual fees from investors. However, the fee is set to be 0.12% for the first 12 months or on the first $5 billion in assets.
iShares Bitcoin Trust has AUM of $6.6 billion and trades in volume of 15 million shares (read: Bitcoin Tops 52,000: 5 ETFs Leading the Rally).
Vanguard Total Stock Market ETF (VTI - Free Report)
Vanguard Total Stock Market ETF has accumulated $4.7 billion in capital. It provides exposure to the broader stock market by tracking the CRSP US Total Market Index. Vanguard Total Stock Market ETF holds a large basket of well-diversified 3,747 stocks with key holdings in technology, consumer discretionary, industrials, healthcare and financials.
Vanguard Total Stock Market ETF charges 3 bps in fees per year from investors and trades in an average daily volume of 3.3 million shares. VTI has amassed $374.3 billion in its asset base and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Invesco QQQ Trust (QQQ - Free Report)
Invesco QQQ Trust saw an inflow of $4.3 billion this year. It provides exposure to the 101 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. Invesco QQQ is moderately concentrated on the top two firms with 8% share each, while other firms hold no more than 5.6% of the assets.
Invesco QQQ is one of the largest and most popular ETFs in the large-cap space, with an AUM of $250 billion and an average daily volume of 40 million shares. QQQ charges investors 20 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.