It’s official: 2024 was a record year for ETF inflows. When all was said and done, $1.12 trillion flowed into U.S.-listed exchange-traded funds during the year, almost double the $600 billion of inflows seen in 2022 and 2023, respectively.
2024’s inflows also handily topped the $900 billion from 2021, the previous calendar year record for inflows.
A strong year for U.S. stock market returns motivated investors to push money into ETFs. The S&P 500 surged by 25% in 2024, nearly matching the 26.3% gain from the previous year. It was the first instance of back-to-back gains of 20% or more for the S&P 500 since the late-1990s.
Unsurprisingly, given the strength in U.S. stocks, investors put most of their money to work in stock ETFs.
Two-thirds of all inflows, or more than $750 billion, went into equity ETFs.
Of that, an incredible $113 billion went into the Vanguard S&P 500 ETF (VOO) and another $85 billion went into the iShares Core S&P 500 ETF (IVV).
2024 marked the first time any individual ETF has seen inflows of more than $100 billion in a calendar year.
VOO now has $584 billion in assets under management, putting it within striking distance of overtaking the $626 billion SPDR S&P 500 ETF Trust (SPY) as the world’s largest ETF (SPY had inflows of around $22 billion in 2024).
The strong returns for the S&P 500 were powered by tech stocks like Nvidia Corp. and Apple Inc. Those stocks, which have an even greater presence in the Invesco QQQ Trust (QQQ), rode the AI wave to enormous gains in 2024.
QQQ had inflows of almost $24 billion in 2024.
While U.S. stocks celebrated strong returns and inflows, the same can’t be said for fixed-income ETFs.
The iShares Core U.S. Aggregate Bond ETF (AGG) finished the year with just a 1.3% return. A selloff in bonds at the end of the year erased gains from earlier in the year.
Still, despite the tepid returns, investors put $303 billion into fixed-income ETFs, including $21 billion into AGG and almost $19 billion into the Vanguard Total Bond Market ETF (BND).
While bonds struggled in 2024, another asset class took off. Cryptocurrency ETFs, which entered a new era with the approval of spot bitcoin ETFs in January 2024, soared while attracting billions of dollars of inflows.
The iShares Bitcoin Trust (IBIT) had inflows of more than $37 billion during the year, propelling its AUM to over $50 billion. The price of the ETF doubled in the same period.
Inflows for the category as a whole totaled $38 billion despite $21 billion of outflows from the Grayscale Bitcoin Trust (GBTC). Previously a quasi-closed-end fund, GBTC’s conversion to an ETF spurred massive outflows as arbitrageurs closed their positions and investors swapped the fund for cheaper alternatives.
