U.S. ETFs have reached a milestone $10 trillion in assets according to Bloomberg data, thanks to a mix of market gains, stealing share from mutual funds and investors pouring money across the board into stock, bond, commodity and alternative funds.
ETFs have pulled in $691 billion so far this year, Bloomberg reported. Those inflows are amplified by gains in stocks, with indexes notching multiple record highs over the year as interest rates were cut and investors bet on a soft landing in the economy.
The investments have been surging since the first ETF was issued just over 30 years ago. The pace of growth has only accelerated, as assets hit $1 trillion 14 years ago, Bloomberg said. Investors use the products in a variety of manners, from hedges to capturing growth in overseas markets to getting exposure to spot cryptocurrency markets, a category introduced this year that holds around $60 billion in assets.
Assets will reach $25 trillion in the next decade, Bloomberg ETF Senior Analyst Eric Balchunas tweeted. “Normally they double assets every 5yrs but this time it only took 3.7yrs.”
Also helping the industry: Just shy of 500 of new funds have opened this year, giving investors access to a range of options from broad indexes to specialized, niche areas, including leveraged stock ETFs. At the same time, about 140 funds have closed.
Market Gains
Investors have increasingly returned to stocks this year, pulling cash from money markets as the Fed came through with interest rate cuts and pushing equities higher. The $583 billion SPDR S&P 500 ETF Trust (SPY), the first and largest ETF tracks the top 500 publicly traded companies in the U.S. and has gained 21% so far this year, well ahead of its average 6.8% annual increase.
While SPY has actually had outflows this year, the No. 2 ETF, the $543.2 billion Vanguard S&P 500 ETF (VOO) has drawn in $45.2 billion. Those two funds account for more than 10% of the ETF market.
Fixed income has also had big asset growth, with the 10 pulling in around $57 billion, according to etf.com data.
The transfer of investments into exchange-traded funds from mutual funds is boosting the industry. Through August, mutual funds had net outflows of $217 billion while ETFs raked in billions, Morningstar recently said.
Globally, ETF assets reached $14 trillion, thanks to net inflows of $1.45 trillion so far this year, according to U.K.-based ETFGI. They started the year at $11.6 trillion for a 21% gain, according to ETFGI founder Deb Fuhr, who is also a member of etf.com’s editorial board.
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