Investors poured more than $915 billion into exchange-traded funds in 2024 as of Wednesday, setting a new record, according to VettaFi. With the election providing a new impetus, inflows are expected to reach the $1 trillion milestone by the end of the year, the company said. “Demand for ETFs and usage of ETFs has accelerated over the past week,” said Todd Rosenbluth, head of research at Bettafi. “The majority of flows continued to be index-based,” he added. “ETFs are becoming the preferred way to gain exposure to the stock market. They offer diversification as opposed to buying a single stock.”In fact, last week was a good day for stocks. This week, the market-wide S&P 500 index rose nearly 1% over the past five trading days through Wednesday. Investor enthusiasm for President-elect Donald Trump's victory last week pushed the average of three major stocks to new highs on Monday. However, the rally has lost momentum in recent days. Investors have been actively participating in the recent rise in stock prices. Since Election Day, more than $58 billion has flowed into ETFs, according to State Street Global Advisors. More than $48 billion of this was invested in U.S. stocks. State Street's popular SPDR S&P 500 ETF Trust (SPY) has seen more than $12 billion in new capital flow since the Nov. 5 election. The Invesco QQQ ETF (QQQ), which tracks the tech-heavy Nasdaq 100 index, has seen more than $8 billion in inflows since Election Day. “The range of users is really expanding in the ETF world,” said Ryan McCormack, senior factor and core equity strategist for exchange-traded funds at Invesco. “Of course, institutional investors and financial advisors, [registered investment advisors] to individual investors. ETF flavors attract notable inflows While index-tracking ETFs have seen the largest dollar inflows, McCormack says there is growing interest in “factor ETFs,” which employ fund-specific rules and strategies. said. The Invesco S&P 500 Momentum ETF (SPMO) is comprised of the 100 stocks that the company rates as having the highest “momentum scores.” The S&P 500 index saw a 25% increase in inflows after the election, and inflows to the Invesco S&P 500 Equal Weight ETF, which reflects market-cap weighted S&P 500 stocks, have increased more than 1,100% year-to-date. Over 24% year-to-date “This kind of alternating-weighted strategy is an easy way to pick up some small exposure from a factor perspective, and unsurprisingly,” McCormack said, “investors are looking at so-called Trump trades such as Bitcoin. “We are also looking to ETFs to take advantage of it,” he said. “It reflects optimism.” It also reduces regulatory headwinds,” said Anna Paglia, chief business officer at State Street Global Advisors. “But this shift in sentiment is more than spot-on, so that optimism will spread across the ecosystem.” State Street said its SPDR Galaxy Digital Asset Ecosystem ETF (DECO) He said that funding has increased by 26% since Election Day. DECO ETF's top holdings include Bitcoin-related stocks, Cipher Mining, Riot Platforms, and Terrawolf. Overall, Rosenbluth believes the post-election rally and possibly the possibility of passing the $1 trillion milestone will be a long-term tailwind for the ETF industry. “Once we get past that important milestone, I think demand is likely to accelerate even further. Asset managers may see that adoption and continue to bring new products to market.”
