ETFs
5 ETFs That Saw Huge Inflows in the First Half of the Year
Investors poured $406.1 billion into ETFs in the first half of 2024, double the $200.6 billion in the same period last year. U.S. equity ETFs led the way with $223.1 billion in inflows, followed by $90 billion in U.S. fixed income ETFs and $55.9 billion in international equity ETFs.
Vanguard S&P 500 Exchange Traded Fund VOO, iShares Core S&P 500 Exchange Traded Fund IVV, BlackRock’s iShares Bitcoin Fund I BITE, Invesco QQQ Trust QQQ and Vanguard Total Stock Market Exchange Traded Fund VTI topped the list of top creations in the first half.
Wall Street ended the first half of the year on a high. The S&P 500 index gained 14.5% while the Dow Jones Industrial Average advanced 3.8%. The Nasdaq Composite Index outperformed, climbing 18.1%. The enthusiasm for artificial intelligence (AI), bets on rate cuts and strong corporate earnings growth were the main catalysts for the stock rally and will continue to do so for the rest of the year. Wall Street analysts have become more bullish on stocks, citing these factors as a strong combination of factors.
The Magnificent Seven have been the main growth driver for the S&P 500 and Nasdaq. About 60% of the gains came from mega-cap tech companies: NVIDIA (NVDA), Microsoft (MSFT), Amazon (AMZN), Meta Platforms (META), and Apple (AAPL). NVIDIA alone accounted for 31% of the market’s gains in the first half of the year. This tech-driven momentum should continue at least through the summer (read: 5 Stocks That Powered the Nasdaq ETF in the First Half of the Year).
At the last FOMC meeting, U.S. policymakers projected just one rate cut this year and four cuts through 2025. The Fed amended the language in its statement, noting that there had been “modest additional progress toward the committee’s 2 percent inflation target.” The statement previously noted a “lack” of further progress. Low rates reduce the cost of borrowing, often needed to finance business expansion, thereby boosting economic growth. They typically reduce the appeal of fixed-income investments like bonds, prompting investors to seek higher yields in equity markets.
Earnings are expected to remain strong in the second quarter. According to the Zacks Earnings Trends report, second-quarter earnings for the S&P 500 are expected to rise 8.3% from the same period last year on revenue that rose 4.6%. This is the strongest pace of quarterly earnings growth since the 9.9% growth in the first quarter of 2022 and would follow earnings growth of 6.7% on revenue gains of 3.2% in the first quarter of 2024.
Moreover, a strong first half for the S&P 500 index historically bodes well for the rest of the year. Since the early 1950s, when the index climbs more than 10% through June, it has averaged about 10% gains in the second half, according to data compiled by Bloomberg. However, high valuations, the U.S. presidential election in November and uncertainty about the path of interest rate cuts will weigh on stocks in the second half of this year.
We have detailed the ETFs below:
Vanguard S&P 500 Exchange Traded Fund (VOO)
The Vanguard S&P 500 ETF led the way in asset flows last week, collecting $40.4 billion in capital. It tracks the S&P 500 index and holds 504 stocks in its basket, each representing at most 7% of assets. The Vanguard S&P 500 ETF is heavily weighted toward the information technology sector, while the financials, healthcare and consumer discretionary sectors round out the next three spots with double-digit allocations each.
The Vanguard S&P 500 ETF charges investors 3 bps in annual fees and trades an average of 4 million shares per day. It has $474.8 billion in assets under management and is ranked #1 (Strong Buy) by Zacks with an average risk outlook.
iShares Core S&P 500 Exchange Traded Fund (IVV)
The iShares Core S&P 500 ETF has raised $28.2 billion in capital. It tracks the S&P 500 index and holds 503 stocks in its basket, each representing at most 7.4% of assets. The iShares Core S&P 500 ETF is heavily weighted toward the information technology sector, while the financials, healthcare and consumer discretionary sectors round out the next three spots with double-digit allocations each.
The iShares Core S&P 500 ETF charges investors a 3 bps annual fee. It has $494.1 billion in assets under management and is ranked #1 on Zacks ETF with an average risk outlook.
BlackRock iShares Bitcoin Trust (IBIT)
BlackRock iShares Bitcoin Trust has raised $17.6 billion in capital in the first six months of 2024. It seeks to mirror the price performance of Bitcoin. It allows investors to access Bitcoin through a traditional brokerage account. The fund charges investors a 25bps annual fee. However, the fee is expected to be 0.12% for the first 12 months or on the first $5 billion in assets (read: Hottest ETFs of H1 2024).
BlackRock iShares Bitcoin Trust has $19.4 billion in assets under management and trades in volume of 23.4 million shares.
Invesco QQQ Trust (QQQ)
Invesco QQQ Trust has seen $16 billion in inflows. It provides exposure to the 102 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. Invesco QQQ is moderately concentrated in the top two companies, with an 8.7% share each.
Invesco QQQ is one of the largest and most popular ETFs in the large-cap sector, with $289.4 billion in assets under management and an average daily volume of 23 million shares. QQQ charges investors 20 bps in annual fees and has a Zacks ETF Rank #2 (Buy), with a medium risk outlook (read: 5 Stocks That Powered the Nasdaq ETF in the First Half of the Year).
Vanguard Total Stock Market ETF (VTI)
The Vanguard Total Stock Market ETF has raised $14.4 billion in capital. It provides exposure to the broader stock market by tracking the CRSP US Total Market Index. The Vanguard Total Stock Market ETF holds a broad, well-diversified basket of 3,704 stocks with key holdings in the technology, consumer discretionary, industrials, healthcare and financials sectors.
The Vanguard Total Stock Market ETF charges investors 3 bps in fees per year and trades an average of 2.5 million shares per day. VTI has accumulated $409 billion in assets and is ranked #2 by Zacks ETF with an average risk outlook.
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Invesco QQQ (QQQ): ETF Research Reports
Vanguard Total Stock Market ETF (VTI): ETF Research Reports
Vanguard S&P 500 ETF (VOO): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
iShares Bitcoin Trust (IBIT): ETF Research Reports