On the Road to a $10 Trillion U.S. ETF Industry

As stock markets push higher, a major ETF industry milestone looms: $10 trillion in assets.

Will it be reached this year? While $9 trillion appears eminently doable, that next trillion will come in only if the right combination of performance and flows fall into place.

Assets under management in U.S.-listed ETFs hit a record $8.53 trillion last week, according to Bloomberg data, as the S&P 500 hovered near record highs. 

Investors have pushed $70 billion into exchange-traded funds so far this year. Still, most of 2024’s asset gains have come from price appreciation and not inflows: of this year’s $380 billion increase in AUM, $310 billion has come from ETFs increasing in price.

Around 61% of all U.S.-listed ETF assets are invested in domestic equity funds, so movements in the U.S. stock market play a big part in driving assets under management up and down.

Another 17% is invested in international equity ETFs, meaning that nearly 8 out of every 10 dollars in ETFs is invested in stocks.

Much of the remainder, or a fifth of the total, is invested in fixed income exchange-traded funds.

The Road to $10T 

At $8.53 trillion, ETF assets under management are around 18% short of the $10 trillion mark. To reach that lofty milestone this year, we would need to see a combination of surging markets and robust inflows. 

 Five years ago, AUM in U.S.-listed ETFs stood at only $3.5 trillion and now we’re on pace to reach triple those levels as soon as this year. The past two years have seen roughly $600 billion of annual inflows, while the year before that had a record $900 billion of inflows.

ETF AUM will probably surpass $9 trillion this year just based on new money coming into funds. Getting to $10 trillion this year would probably take some help from the markets.

If the U.S. stock market slides, all bets are off and $10 trillion almost certainly won’t happen in 2024. But if get a strong double digit rise in the S&P 500, then it starts to become feasible.

In any case, $10 trillion is just a matter of when, not if. And it’s a testament to the enormous growth that ETFs have seen over the past decade.