ETF flows records concentrated among top four issuers

New analysis from Australian exchange traded fund (ETF) specialist, VanEck, has confirmed the ETF industry hit new highs in 2024, but they were mostly shared among the top four issuers.

Net flows hit $3.8 billion in December 2024, an all-time record, taking total net flows for the 2024 calendar year up to $35 billion, beating the annual record of $23.2 billion previously set in 2021.

Of December’s net flows, the top four ETF providers – Vanguard, Betashares, iShares and VanEck – accounted for 96.4 per cent; similarly, of the calendar year flows, the same four issuers accounted for 98.8 per cent.

The latest VanEck ETF Industry Pulse also indicated the industry’s market capitalisation hit $247 billion, reflecting year-on-year growth of 38 per cent. The analysis attributed this to an increase in products brought to market by fund managers as Australian investor demand for ETFs continues to rise exponentially; 64 new ETFs launched in 2024 on the Australian Securities Exchange and CBOE, taking the total number of exchange traded products (ETPs) in Australia to 401.

“Industry growth has been fuelled by the popularity of international equities ETFs, which saw unprecedented net flows of more than $15 billion for the year – more than double the flows into Australian equities. Compared to last year, where flows to international equities ETFs came in third after fixed income and Australian equities, international equities ETFs have been the clear front-runner in 2024,” the analysis said.

“Looking ahead, the growth trajectory for ETFs is expected to continue unabated, with the market cap likely to exceed $250 billion in the first quarter and $300 billion by the end of the year.”

According to data sourced by VanEck, Bitcoin was the top returns generator for the 12 months to 31 December 2024, setting a large gap of 146.5 per cent to be followed by US equities (38.2 per cent) and global equities (31.2 per cent).

The strong performance of the cryptocurrency thematic was reflected in the Global X 21Shares Bitcoin ETF returning 146 per cent annually. Similarly, the jump in positive sentiment surrounding the US in the wake of the presidential election outcome has seen the performance of US-oriented and tech ETFs soar in December 2024, including the Global X FANG+ ETF (12.3 per cent) and the Betashares Strong US Dollar Fund (11.8 per cent).