Amid the robust performance of the New York stock market, U.S. stock ETFs have recorded unprecedented capital inflows.
The Wall Street Journal reported on Monday, citing ETFGI data, that U.S. ETFs have attracted over $1 trillion in new investments by the end of November 2024.
This surpasses the previous record set in 2021 when stock prices rallied in the wake of the pandemic.
Buoyed by this record-breaking influx, U.S. ETF assets under management reached $10.6 trillion, an increase of over 30% year over year.
There are high expectations that next year’s inflow will break this record again.
This year, the S&P 500 surged 25% on the New York Stock Exchange, which became the key driver behind the massive ETF inflows.
The trend is further bolstered by a long-term shift from mutual funds to ETFs, as American investors increasingly favor ETFs for their tax advantages and ease of investment.
Brian Hartigan, head of ETF and index investments at Invesco, stated, “Investors have clearly regained their confidence this year. The market sentiment is leaning towards risk.”
Invesco’s QQQ ETF, which tracks the Nasdaq 100 index, saw over $27 billion in inflows by mid-December, a 3.7-fold increase from last year’s $7.3 billion.
The Nasdaq 100 index tracks the performance of the top 100 companies in the tech-heavy Nasdaq composite.
In particular, ETF investments surged following Donald Trump’s November 5 election victory, buoyed by his promises of deregulation and tax cuts.
In November, the inflow of new funds into ETFs set a monthly record with $164 billion.
Remarkably, 97% of global stock ETF net inflows in November were directed towards U.S. equity ETFs.
Matthew Bartolini, head of research at SPDR Americas, attributes the U.S. stock ETF boom to American exceptionalism, citing the country’s dominant economic growth, profitability, and performance.
