Executive Summary
- The global ETF industry enjoyed overall inflows (+$115.3 bn) for June 2024 and (+633.8 bn) for the year so far.
- ETFs domiciled in the U.S. enjoyed the highest inflows (+$76.6 bn) for the month, followed by ETFs domiciled in Ireland (+$18.3 bn) and Canada (+$7.1 bn).
- Equity ETFs (+$78.4 bn) enjoyed the highest estimated net inflows for the month, followed by bond ETFs (+$32.0 bn) and money market ETFs (+$2.1 bn).
- The best-selling Lipper global classification for June 2024 was Equity U.S. (+$29.2 bn), followed by Equity US Small & Mid Cap (+$10.7 bn) and Equity Global (+$10.0 bn).
- ESG-related ETFs enjoyed inflows (+$5.7 bn) over the course of June.
- BlackRock was the best-selling ETF promoter globally for June (+$58.5 bn). It was followed by Vanguard (+$11.9 bn) and Invesco (+$6.56 bn).
- Active/Semi Active ETFs enjoyed inflows (+$23.0 bn) for the month.
General Overview
June 2024 was another month with healthy inflows for the global ETF industry.
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 the 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) 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 the 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 $12,465.0 bn as of May 31, 2024, to $12,980.0 bn at the end of June). At a closer look, the increase in assets under management of $514.9 bn for June was driven by the performance of the underlying markets (+$399.6 bn), while the estimated net inflows contributed (+$115.3 bn) to the growth of the assets under management. Looking at the different product types, the promoters of ETFs (+$115.1 bn) and the promoters of structured notes (+$0.2 bn) enjoyed estimated net inflows over the course of June 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 June 2024.
Table 1: General Overview on Global Assets Under Management and Estimated Fund Flows by Regions and Major ETF Domiciles (June 30, 2024)
Assets Under Management
Assets under management in the global ETF industry increased from $12,465.0 bn as of May 31, 2024, to $12,980.0 bn at the end of June 2024. The majority of these assets ($10,158.4 bn) were held in equity ETFs. This category was followed by bond ETFs ($2,267.2 bn), commodities ETFs ($200.3 bn), alternatives ETFs ($121.8 bn), ”other” ETFs ($94.5 bn), money market ETFs (€93.7 bn), mixed-assets ETFs ($44.1 bn), and real estate ETFs (€0.02 bn).
Graph 1: Market Share Assets Under Management in the Global ETF Industry by Asset Type – June 30, 2024
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 $12,707.6 bn, or 97.90%, of the overall assets under management, the structured notes covered in this report held $272.4 bn, or 2.10%, of the overall assets under management covered in this report at the end of June 2024.
Graph 2: Market Share Assets Under Management in the Global ETF Industry by Product Type – June 30, 2024
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 ($12,128.4 bn or 93.44%), while ETFs which aim to outperform an index or are not linked to an index at all held $851.5bn, or 6.56%, of the overall assets under management at the end of June 2024.
Graph 3: Market Share Assets Under Management in the Global ETF Industry by Management Approach – June 30, 2024
Assets Under Management Factor-Based ETFs
Since products which follow a factor-based strategy—the so-called smart beta products—can be found under both product types, it makes sense to highlight the high overall market share of factor-based products. Overall, factor-based products held assets under management of $2,583.3 bn at the end of June, which means in turn these products had an overall market share of 19.90%. The high percentage of the assets under management in factor-based ETFs shows that these products, which have been seen as marketing-driven product launches in the past, have become mainstream investments over time.
Graph 4: Market Share Assets Under Management in the Global ETF Industry Factor-Based ETFs vs Conventional ETFs – June 30, 2024
It is actually no surprise that investors around the globe use factor-based ETFs within their portfolios since these products offer access to a broad range of factors which have proven that they can be exploited to deliver additional returns for investors over longer time periods. Nevertheless, the potential outperformance of a given factor is often dependent on the right timing of the investment since single factors do not deliver a consistent outperformance. With regard to this, it is no surprise that the global ETF industry developed products which use multiple factors. These products shall be easier to use for investors since the usage of multiple factors shall remove the need for market timing.
The graph below shows the variety of factor strategies which are available to investors.
As multifactor ETFs are convenient products, it is no surprise that these products held the highest assets under management in the segment of factor-based ETFs ($1,048.3 bn). They are followed by ETFs using dividends as a selection factor ($410.6 bn), ETFs using the growth factor ($303.1 bn), size factor ETFs ($272.1 bn), and ETFs using the value factor ($258.9 bn).
Graph 5: Market Share Assets Under Management of Single Factors within the Factor-based ETF Universe – June 30, 2024
Assets Under Management ESG-Related ETFs
Since sustainable investing is one of the major topics for investors around the globe, it is no surprise that the global ETF industry offers sustainable products. That said, the products available use different strategies and sustainable investment credentials. With regard to this, it is noteworthy that not all ETFs which have implemented some kind of sustainable investment credentials can be seen as sustainable or ESG products. Nevertheless, this statistic marks all ETFs which state the use of at least one ESG-related credential to determine the constituents of its index as ESG-related, while ETFs which do not use any sustainable investment credentials are marked as conventional ETFs.
Given the fact that most portfolios are still benchmarked against conventional indices, it is not surprising that conventional ETFs ($12,328.4 bn) held the vast majority of the assets under management in the global ETF industry while their ESG-related peers held $651.6 bn in assets under management at the end of June 2024.
Graph 6: Market Share Assets Under Management in the Global ETF Industry ESG-Related ETFs vs Conventional ETFs – June 30, 2024
Since there are currently a lot of regulatory initiatives underway to tackle “greenwashing,” especially with regard to the alignment of fund names with the actual fund strategy and the respective usage of ESG credentials within the securities selection process, we might witness a lot of change with regard to the usage of ESG credentials in fund names or the fund related literature. As a consequence, these changes might lead to significantly lower assets under management in ESG-related funds over the course of the next few months since fund and ETF promoters want to avoid being accused practicing greenwashing.
Given the overall market structure of the global ETF industry it is no surprise that equity ETFs ($496.7 bn) held the highest assets under management in the segment of ESG-related ETFs. They were followed by bond ETFs ($120.7 bn), “other” ETFs ($28.3 bn), commodities ETFs ($2.8 bn), alternatives ETFs ($2.1 bn), mixed-assets ETFs ($0.7 bn), and money market ETFs ($0.4 bn).
Graph 7: Market Share Assets Under Management of ESG-Related ETFs by Asset Type – June 30, 2024
Assets Under Management by Region
ETFs domiciled in North America ($9,551.2 bn) held the highest assets under management in the global ETF industry at the end of June 2024. They were followed by ETFs domiciled in Europe ($2,015.2 bn), ETFs domiciled in the Asia Pacific region ($1,388.3 bn), ETFs domiciled in South and Central America ($16.3 bn), and ETFs domiciled in Africa ($8.9 bn).
Graph 8: Assets Under Management in the Global ETF Industry by Region – June 30, 2024 (in mn USD)
In more detail, the U.S. was the largest single country ETF domicile ($9,202.9 bn) at the end of June 2024, followed by Ireland ($1,442.4 bn), Japan ($560.0 bn), Luxembourg ($359.2 bn), and Canada ($348.3 bn). These five ETF domiciles account for assets under management of $11,912.8 bn, or 91.78%, of the overall assets under management in the global ETF industry.
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