ETFs Pull in $1T YTD for First Time Amid Market Leap

Exchange-traded funds have topped $1 trillion in year-to-date inflows for the first time, as investors pile into 2024’s broad market rally that’s accelerated with the reelection of business-friendly Donald Trump as the next U.S. president. 

The inflows reported by Bloomberg News beat the previous record of $903 billion set in 2021. Barring unexpected turns in events that causes investors to pull money from funds, flows will march higher over the year’s remaining few weeks. State Street said this week it expected total 2024 inflows of $1.2 trillion. 

Markets have jumped across almost all industries and segments, with rallies in so-called Mag 7 stocks that include Nvidia Corp. and Tesla Inc. helping to draw in new investors. The S&P 500, as measured by the S&P 500 ETF Trust (SPY) has gained 29% this year while financial stocks, as measured by the Financial Select Sector SPDR Fund (XLF), beat that with a 35% gain. 

The flood of new cash is threatening to shake up the ETF industry as inflows at No. 2 issuer Vanguard Group beat those of leader BlackRock Inc. Through Dec. 2, Vanguard has pulled in $258.7 billion, more than a quarter of all inflows, well ahead of the $210.1 BlackRock’s iShares have grabbed. 

VOO vs. SPY 

About half of the money that went to Vanguard was invested in the $588.2 billion Vanguard S&P 500 ETF (VOO). That ETF has pulled in $104 billion this year, more than 10% of all inflows, handily beating the $2.88 billion that’s gone into SPY, its bigger rival and the world’s biggest ETF with $624.2 billion in assets.

Biggest YTD Inflows

Source: etf.com Pulse tool

New money has been funneled into ETFs after investors held back in 2022 and 2023 as recession fears mounted and the Federal Reserve began its fastest series of interest hikes since the 1980s. U.S. equities are the envy of the investing world this year largely due to improving corporate earnings, State State said this week. 

At the same time, investors are betting tens of billions on spot cryptocurrency ETFs that began trading this year. The largest, the iShares Bitcoin Trust (IBIT), has drawn in $31.7 billion, through Dec. 2, since it began trading Jan. 11. It’s rewarded investors with a 71% gain.