After May, ETFs Head For Second Best Year Ever

ActiveETFS

The bullish mood in the financial markets led to a strong Can for domestic equity ETFs, including a particularly strong performance for active strategies, and has now put the funds on track to achieve the second highest level of inflows in their history, according to the author of a report from State Street Global Advisors.

The report, which credits the current rally in the technology and communications services sectors for maintaining risk appetite among investors, showed that $92 billion was invested in ETFs over the May, the best ever for the month and the ninth best for a month.

Of these flows, $60 billion was invested in equity ETFs, including $50 billion in U.S. equity strategies. This trend aligns with the strength of broader markets. The S&P 500 has gained 11.2% since the start of the year. this year until May.

Projecting the $320 billion in ETF inflows so far this year to a full-year total, report author Matthew Bartolini, head of SPDR Americas Research at Boston-based SSGA, said that ETFs would generate $770 billion in 2024. But Bartolini added that this total does not take into account “the usual 31% increase in capital inflows in the second half”, which could bring the total to $890 billion, the second highest annual result behind 2021’s $990 billion.

Active ETFs collect assets

SSGA results showed strong investor appetite for actively managed strategies, with $22 billion invested in active ETFs in May, marking the 50th consecutive month of inflows into active ETFs.

Until May, active ETFs have accumulated over $108 billion, representing 33% of all ETF flows despite only representing 7% of all ETF assets.

“The pace is unlike anything we’ve seen, and active ETFs could reach a record $260 billion if year-to-date average flow trends continue,” Bartolini said.

The $13 billion invested in active stock ETFs in May represented the third-highest monthly inflow for the category, according to the report. Active bond ETFs received $7 billion during the month, marking the second-highest monthly inflow for the category and a record 13th consecutive month with over $1 billion in inflows.

Alternative strategy ETFs received $2.7 billion in May for a five-month total of $18.6 billion.

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