U.S. ETF Industry Assets Climb to Record $9.7T in August
U.S. ETF industry assets continued their momentum, climbing to a record $9.7 trillion in August to top their previous high set just a month earlier, according to research group ETFGI.
The total represents a 20.1% increase from $8.1 trillion at the end of 2023, London-based ETFGI said in its monthly landscape insights report. ETFs had nearly $9.5 trillion in assets at the end of July.
ETFGI's data underscores investors' growing interest in ETFs, which issuers have tried to address through a widening array of products. The industry gathered net inflows of $66.3 billion during August, bringing year-to-date net inflows to a record 643.5 billion, ETFGI reported.
Source: ETFGI
Deborah Fuhr, managing partner and founder of ETFGI, attributed the growth to several factors, including investor optimism and a shift from cash to market investments. She also highlighted the increasing preference for ETFs over other investment vehicles.
“I think, in general, that investors are preferring the ETF wrapper over other investment wrappers,” Fuhr explained.
There has been an expansion of ETF offerings into new strategies such as active management and fixed income products, Fuhr said, adding that cryptocurrency-based ETFs have also been a significant driver of inflows earlier in the year.
Investor Optimism Drives ETF Growth
The report highlighted that equity ETFs gathered net inflows of $18.7 billion in August, bringing year-to-date net inflows to $288.7 billion. This figure is higher than the $120.8 billion in net inflows during the same period in 2023.
Fixed income ETFs also generated strong interest, with net inflows of $25.6 billion in August, bringing their 2024 total to $130 billion. Year-to-date net inflows for active ETFs totaled $180.4 billion, more than double the $74.2 billion in the same period of 2023.
Fuhr noted that the growth in active ETFs is partly due to investor demand for more tax-efficient and cost-effective options compared to mutual funds.
“One of the benefits they see of having active strategies, and one of the reasons they're encouraging active asset managers to launch active strategies as ETFs, is they expect the ETF to be more tax efficient than a mutual fund,” Fuhr said. “They expect the cost to be less, they expect the minimum size to get in and out to be less, and they want to be able to do it when and how they want to.”
The Vanguard S&P 500 ETF (VOO) led individual ETFs with the largest net inflows of $7.9 billion in August, followed by the iShares Core S&P 500 ETF (IVV) with $5.9 billion, and the Vanguard Information Technology ETF (VGT) with $4 billion, according to ETFGI data.
Read More: VOO, IVV Gain Ground on SPY in S&P 500 ETF Race
As the U.S. ETF market approaches the $10 trillion mark, Fuhr expressed hope for broader retail investor participation.
“I hope that hitting $10 trillion helps retail investors of all ages to think about how easy it is to start saving,” Fuhr said. “People really need to think about saving for retirement, for a house, going to school, going on holiday, but starting to think about investing and putting some money aside.”
Deborah Fuhr is a member of the etf.com Editorial Advisory Board.