- Vanguard dominates the ETF market, accounting for 32% of all inflows as innovative fund offerings continue to grow.
- US ETF assets reach historic milestone of $10 trillion, with inflows of $691 billion in 2024 alone.
OUR TAKE
Assets held in US exchange traded funds (ETFs) have surpassed $10 trillion for the first time, marking a significant milestone in the financial landscape. The surge has been driven by a combination of inflows and market gains as investors increasingly favour ETFs over traditional mutual funds due to their liquidity and tax advantages. With nearly 3,800 ETFs in the market and new strategies emerging, this trend demonstrates how ETFs have democratised access to complex investment opportunities. What this milestone shows, in my view, is that ETFs are not just a passing trend, but a fundamental shift in the way people invest, providing greater access and flexibility for retail and institutional investors alike.
–Heidi Luo, BTW reporter
What happened
US exchange traded funds (ETFs) have surpassed $10 trillion in assets for the first time, marking a historic milestone for the investment vehicle. According to data compiled by Bloomberg Intelligence, $691 billion flowed into ETFs in 2024, fuelled by a strong market rally. This latest achievement highlights the continued rise of ETFs as investors seek more liquid and tax-efficient alternatives to traditional mutual funds.
The ETF industry has grown rapidly over the past 14 years, from $1 trillion to $10 trillion in assets. Vanguard Group has been a major player, capturing 32% of this year’s inflows, its third-best year to date. With nearly 3,800 ETFs on the market, the trend shows no signs of slowing as new fund offerings and innovative strategies continue to attract investors.
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Why it’s important
The $10 trillion milestone for US ETFs is significant because it underscores the growing dominance of these investment vehicles in the financial markets. ETFs have revolutionised investing by giving retail investors access to complex asset classes and strategies once reserved for institutional investors. Amrita Nandakumar, President of Vident Asset Management, noted that ETFs have “democratised investing” by making it easier for a wider range of investors to participate in the markets.
In addition, the growing popularity of ETFs has led to a decline in mutual fund assets and fee income for traditional money managers as more investors opt for the lower-cost ETF structure. As Jillian DelSignore of Nasdaq Global Index Group pointed out, ETFs have become “the vehicle of choice for investors” and this trend is expected to continue with further innovations, including exposure to private markets and outcome-based strategies.
