Annual investments into exchange-traded funds are set to top $1 trillion for the first time this year, following a record third quarter and the strongest year-to-date growth in three years.
The latest quarterly Morningstar report, published on the same day as a series of gloomy or flat trading updates from asset managers, showed a record third-quarter inflow of $392 billion into ETFs.
This meant fund flows have reached $947 billion in the first nine months of 2024 so far, putting the trillion-dollar milestone well within reach with three months of the year to go as growth in ETF flows in the year to date has been just below 10%, the fastest since 2021's near-11% increase.
At the end of September ETF assets stood at $13.4 trillion, up $3.7 trillion from a year earlier, of which two-thirds was thanks to the appreciation of existing ETF investments and the remainder from inflows.
In the past three months, while flows into equity ETFs made up 60% of the total, fixed-income ETFs had a record quarterly flow of $127 billion, topping the previous record of flows at the height of the 2020 Covid market crash.
Actively managed fixed-income ETFs grew organically at 12.8% in the third quarter and at 37% for the year to date.
Alternatives ETFs saw flows at 3% of the total in the quarter, and 4% for the year to date.
While US flows dominate global ETF assets and flows on an absolute basis, Morningstar said ex-US ETFs have grown faster so far this year, at 9% versus 8.4%.
Actively managed strategies, such as those pursued by Cathie Wood's ARK Invest, took 24% of exchange-traded fund flows in 2024 through September and grew organically at 33%, taking a small bite out of the dominant passive ETFs market, which grew at a 7% organic rate.
Actively managed ETF assets have grown to a record USD 973 billion after starting the year with $683 billion.