The world of exchange-traded funds reached new heights in 2024, with investors pouring a staggering $1.6 trillion into these investment vehicles, according to Bank of America.
This surge pushed the global ETF market to $15.1 trillion in total assets, marking a dramatic shift in how both individuals and institutions invest their money.
The industry’s explosive growth wasn’t just about money flowing in – a record 1,485 new ETFs hit the market in 2024, bringing the total number of funds created since 1993 to 15,866.
Active ETFs carved out their own success story, capturing 18% of total inflows as investors seek strategies that aim to beat the market. Yet passive funds still dominate, controlling over half of all equity fund assets.
In a notable power shift, Vanguard’s S&P 500 ETF (VOO) is gaining ground on the industry pioneer SPDR S&P 500 ETF (SPY). VOO’s lower fees helped it attract over six times more money than SPY in 2024, positioning it to potentially become the largest ETF by 2026.
The year’s top performers showed investors favoring broad market exposure and emerging opportunities. VOO led the pack with $122.75 billion in inflows, while the new iShares Bitcoin Trust (IBIT) captured $37.04 billion, highlighting growing mainstream acceptance of crypto-focused funds.
This transformation of the investment landscape reflects a broader change in how Americans build wealth. ETFs have become the go-to choice for their blend of flexibility, tax advantages, and lower costs compared to traditional mutual funds.
Bank of America expects this shift to accelerate as more mutual funds convert to the ETF structure to stay competitive in an evolving market.
