3 Trends Dominating Fund Flows Right Now | ETF Trends

Interpreting flows into ETFs and mutual funds sometimes feels an awful lot like reading tea leaves, but I love it. As an ETF nerd, I find it deeply thrilling to parse where investors are putting their money and why. Asset flows provide useful glimpses into market sentiment and can even help highlight future investment trends before they become widespread.

That’s why I’m so excited to be joining Dave Lubnik, SVP of Institutional Sales at YCharts, for their upcoming “Fund Flows in Review: Q1 2024,” a webcast deep-dive on ETF and mutual fund flows since the start of the year.

Over the course of the hour, we’ll examine which asset classes, sectors, and themes brought in the most fund flows last quarter. We’ll also put context around those numbers about how investor sentiment is shaping the markets right now.

We’ll get into more specifics on the webcast. However, I can already point to three trends shaping flows into ETFs and mutual funds right now. (Beyond the bitcoin ETF, of course):

  • Model portfolio buying and selling: A fund’s inclusion or exclusion in a model portfolio can drive hundreds of millions of dollars in or out of that fund. Indeed, we’re increasingly seeing model usage moving the needle on AUM growth in individual funds. That’s particularly true for active products, like the BlackRock U.S. Equity Factor Rotation ETF (DYNF), which brought in nearly $6.8 billion in Q1 2024. 
  • Low-cost, diversified equity market participation: Forget sitting on the sidelines. With the stock market striking lofty highs last quarter, investors clamored for a piece of the action. They poured $140 billion into equity ETFs in the first quarter, mostly into broad-based U.S. funds. For example, Vanguard S&P 500 ETF (VOO) alone took in $24 billion in Q1—nearly twice as much as the fund with the second-highest inflows.
  • The vehicle matters less than the strategy. This has always been true, of course; different investment vehicles make sense in different contexts. Mutual funds still make more sense in 401(k)s; while ETFs make more sense in taxable accounts, and so on. However, with so many innovative strategies now offered in the ETF wrapper, ETFs provide exposures previously difficult to access outside of mutual funds, from options strategies to long/short to single-Treasury exposures. Now, investors are putting their money toward whichever vehicle provides the best bang for the buck—which is often, but not always, an ETF.   

We’ll talk about all this and more in the webcast, and there will be plenty of time for questions. So bring your toughest head-scratchers; we love to be stumped!

Fund Flows in Review: Q1 2024” will take place on Thursday, April 25 at 2 PM ET/1 PM CT. You can find out more information or register for the webcast at the link. Hope to see you there!

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