US ETFs see record-breaking inflows and market gains, surpassing mutual funds with $691bn in 2023 alone
Exchange-traded funds (ETFs) in the US have surpassed $10tn in assets under management, according to Bloomberg.
This marks a significant milestone for the investment products, which continue to reshape Wall Street. A combination of strong market gains and $691bn in investor inflows this year has driven total ETF assets beyond this threshold, with US stock markets repeatedly hitting record highs.
ETFs, which offer easier trading and tax advantages, have drawn significant investor interest, leading to a shift away from traditional mutual funds.
As a result, money managers have seen a reduction in fee income. Issuers have responded by developing more complex strategies within ETF structures to meet investor demand.
Amrita Nandakumar, president of Vident Asset Management, emphasized the rapid growth of ETFs, stating, “The growth has been incredible,” especially considering that the ETF industry reached $1tn just 14 years ago.
She added, “ETFs now offer nearly universal access to asset classes and strategies that were once available only to the world’s most sophisticated institutional investors.”
With around 3,800 ETFs available, the market is on track to set new records for both fund launches and inflows. Vanguard Group Inc. has seen 32 percent of all inflows this year, marking its third-best year.
New ETF offerings have primarily been in actively managed funds or those utilizing derivatives and leverage, as issuers seek to innovate and capture market share.
Jillian DelSignore, global head of investor distribution strategy at Nasdaq Global Index Group, highlighted that ETFs are becoming the “vehicle of choice” for investors.
She also pointed out that ETFs are evolving to include private markets and outcome-oriented strategies, further expanding the options available to investors.
