Source: Wall Street News

In 2024, Wall Street is experiencing an 'ETF carnival', with new funds exceeding 1 trillion dollars, breaking the record set three years ago.

According to data from ETFGI, as of the end of November, the total assets of US ETFs reached a record 10.6 trillion dollars, growing by over 30% since the beginning of 2024.

Analysts point out that this growth is mainly attributed to the S&P 500 Index rising by about 25% within the year and investors' recognition of US Assets. Invesco's head of ETF and Index investing, Brian Hartigan, stated:

"Investors have clearly regained confidence this year, and market sentiment is leaning towards risk."

As risk appetite returns, the ETF market is booming.

With the increase in ETF assets, Wall Street giants like Blackrock have also welcomed record management fees, which have pushed their stock prices to historical highs. In addition, small Asset Management companies focusing on actively managed ETF strategies have also reaped significant rewards.

Invesco's QQQ Fund (which tracks the NASDAQ 100 Index dominated by Technology Stocks) closely follows, attracting over $27 billion in new funds this year, compared to only $7.3 billion in 2023.

Following Trump's victory in November this year, investor optimism has driven an Inflow into ETFs, setting a historical monthly record of $164 billion. Many anticipate that Trump's second term will implement tax cuts and deregulation.

Bond ETFs have also experienced strong growth. As the Federal Reserve begins its rate-cutting cycle, investors are seeking to lock in higher yields. This year, the Inflow into bond funds accounted for nearly 20% of total managed Assets at the beginning of the year. Although the Inflow into stock funds is more than twice that of fixed income funds, the growth rate of bond funds is faster.

Behind the frenzy, there are also hidden risks.

As 2024 comes to a close, stock ETFs remain the Block Orders. According to research from State Street's ETF Business SPDR team, the difference in Inflow between U.S. stock funds and other types of ETFs reached a historical high in November, with 97% of net Inflows into stock funds directed towards the U.S. market.

Matthew Bartolini, head of Americas research at SPDR, stated:

"People are very excited about the USA's economic growth, profitability, and outperformance."

However, Bartolini warned that in the pursuit of performance, investors may be overly concentrated on large Technology companies and Large Cap stocks in the USA, and this "buy high, sell low" mentality may pose potential risks.

In addition, actively managed ETFs have become a new area of growth. Although ETFs have long been dominated by passive investment, this year the emergence of more complex options-based strategies and the explosion of Bitcoin Funds has changed the market landscape.

It is worth mentioning that those funds, humorously referred to by the industry as "Baby Boomer Confectioners," use options-based strategies to reduce volatility and are favored by retirement investors.

However, whether passive or actively managed ETFs share one commonality: fees. David Mann, head of ETF products and Capital Markets at Franklin Templeton, stated:

"Due to the increase in actively managed assets, our average fees have actually risen."

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编辑/jayden