Executive Summary
- The global ETF industry enjoyed overall inflows (+$178.1 bn) for July 2024 and (+812.1 bn) for the year so far.
- ETFs domiciled in the U.S. enjoyed the highest inflows (+$135.9 bn) for the month, followed by ETFs domiciled in Ireland (+$16.7 bn) and Taiwan (+$8.0 bn).
- Equity ETFs (+$99.6 bn) enjoyed the highest estimated net inflows for the month, followed by bond ETFs (+$54.3 bn) and alternatives ETFs (+$17.1 bn).
- The best-selling Lipper global classification for July 2024 was Equity U.S. (+$62.3 bn), followed by Alternative Currency Strategies (+$14.4 bn) and Bond USD Corporates (+$9.7 bn).
- ESG-related ETFs enjoyed inflows (+$6.4 bn) over the course of July.
- BlackRock was the best-selling ETF promoter globally for July (+$35.6 bn). It was followed by Vanguard (+$35.2 bn) and State Street Global Advisors (+$29.2 bn).
- Active/Semi Active ETFs enjoyed inflows (+$27.8 bn) for the month.
General Overview
The global ETF industry enjoyed general inflows over the course of July 2024.
These inflows occurred in a positive market environment. Nevertheless, equity markets looked somewhat vulnerable given the high valuations of the market leaders. With regard to this, it is not surprising that investors are nervous and reacting quite fast on any news that may impact the current market environment negatively.
This is not only true for economic news, as the geopolitical tensions in the Middle East, especially the developments around the Red Sea, are seen as a risk for the general economic growth in Western countries since a number of shipping companies these days avoid the passage of the Suez channel. It is, therefore, to be expected that prolonged delivery times will cause some tensions for the still vulnerable delivery chains.
Market sentiment was further driven by hopes that central banks will start to lower key interest rates. While the European Central Bank (ECB) and the Bank of England (BoE) started to lower interest rates, it is still unclear if and when the U.S. Federal Reserve will start to lower the interest rates in the U.S. That said, the latest statements from the U.S. Fed on its expectations for the start of lowering interest rates might have caught some investors on the wrong foot since the central bank indicated that it may start the lowering of interest rates later and with less steps in 2024 than some investors expected. These statements might have impacted the estimated net flows in bond and money market ETFs.
As a result, some investors may have reviewed their expectations for bonds, as there is the risk that inflation in the major economies might be more sticky than expected and central banks are held responsible to reach their inflation targets. Additionally, there are still some concerns about the possibility of a recession in the U.S. and other major economies around the globe. These fears have been raised by a lack of growth in some economies and the long-term inverted yield curves which are seen as an early indicator for a possible recession. The normalization of inverted yield curves might be another short-term challenge for the bond markets.
From an ETF industry perspective, the performance of the underlying markets led, in combination with the estimated net flows, to increasing assets under management (from $13,055.2 bn as of June 30, 2024, to $13,162.3 bn at the end of July). At a closer look, the increase in assets under management of $107.1 bn for July was driven by estimated net inflows (+$178.1 bn), while the on average negative performance of the underlying markets contributes -$71.0 bn to the growth of the assets under management. Looking at the different product types, the promoters of ETFs (+$164.0 bn) and the promoters of structured notes (+$14.1 bn) enjoyed estimated net inflows over the course of July 2024.
That said, a more detailed view on the estimated net flows by region shows that the fund flows trend were not consistent for all regions as some ETF domiciles faced outflows over the course of July 2024.
Table 1: General Overview on Global Assets Under Management and Estimated Fund Flows by Regions and Major ETF Domiciles (July 31, 2024)
Source: LSEG Lipper
Assets Under Management
Assets under management in the global ETF industry increased from $13,055.2 bn as of June 30, 2024, to $13,162.3 bn at the end of July 2024. The majority of these assets ($10,262.1 bn) were held in equity ETFs. This category was followed by bond ETFs ($2,338.5 bn), commodities ETFs ($202.1 bn), alternatives ETFs ($141.8 bn), ”other” ETFs ($96.7 bn), money market ETFs (€75.7 bn), mixed-assets ETFs ($45.4 bn), and real estate ETFs (€0.02 bn).
Graph 1: Market Share Assets Under Management in the Global ETF Industry by Asset Type – July 31, 2024
Source: LSEG Lipper
Since this report covers a limited number of ETNs and ETCs, the so-called “structured notes” alongside ETFs, it is important to show the market share of assets under management of these products in comparison to ETFs to indicate the relevance and possible impact of these products for this study.
While ETFs held $12,865.3 bn, or 97.74%, of the overall assets under management, the structured notes covered in this report held $292.1 bn, or 2.26%, of the overall assets under management covered in this report at the end of July 2024.
Graph 2: Market Share Assets Under Management in the Global ETF Industry by Product Type – July 31, 2024
Source: LSEG Lipper
Since ETFs are product wrappers which are used for passive index tracking products and active/semi-active strategies, it is important to shed a light on these two different product categories. Market observers expect more growth in the segment of active/semi-active products in the future since an increasing number of active managers are starting to launch ETFs not linked to an index or ETF share classes of existing actively managed mutual funds. It is expected that this trend will continue since the patent on ETF share classes held by Vanguard expired in April 2023.
Nevertheless, it is no surprise that index tracking products held the vast majority of the overall assets under management in the global ETF industry ($12,293.2 bn or 93.40%), while ETFs which aim to outperform an index or are not linked to an index at all held $869.2bn, or 6.60%, of the overall assets under management at the end of July 2024.
Graph 3: Market Share Assets Under Management in the Global ETF Industry by Management Approach – July 31, 2024
Source: LSEG Lipper
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