This week's Chart of the Week comes from the 2024 ETF Fund Flows report. The report goes into detail regarding the growth of the investment product and its adoption in 2024.
Global ETF flows captured an annual record USD 1.5 trillion for the calendar year. Funds grew organically 13.6%, the highest rate since 2021. Funds ex-US also had a record year of flows of USD 377 billion, easily surpassing the previous mark of USD 292 billion set in 2021.
Assets reached a record USD 13.8 trillion, USD 2.7 trillion higher than at the end of 2023.
The funds were concentrated – equity and fixed-income funds captured 95% of flows, or USD 1.4 trillion. Neither of these bellwether asset classes had a single month of outflows in 2024. Both broad asset classes had record annual flows. Fixed income’s 18% growth rate was 50% higher than equity’s 12%, albeit beginning from an asset base only a quarter of equity’s size.
So, what does this all indicate for investors? Exchange Traded Funds (ETFs) are often portrayed as investments for ‘beginner’ investors. Some of them track well known indexes or ‘easy’ to understand themes. They are straightforward to trade. They are more approachable than picking individual shares. However, it is being adopted en-masse, indicating that they are finding places in more and more investors’ portfolios, and with greater investment.
There are many considerations before deciding on including an ETF in your investment portfolio. I’ve written a piece on what investors should consider here.
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