It was another free-flowing Q2 for stock ETF flows.
Fidelity Active Investor
Key takeaways
- As markets rallied to new all-time highs, stock ETF flows were strong in Q2.
- Bond ETF flows strengthened as well.
- Active ETF offerings and flows continue to grow.
The ETF industry totaled more than $200 billion of flows during Q2, bringing the year-to-date total to $404 billion. That’s up 85% compared to the first half of 2023. ETFs now have $9.2 trillion in assets under management across more than 3,500 products.
Here’s the latest happenings in ETFs.
Stock ETF flows lead again
Similar to Q1, ETF net flows (i.e., inflows less outflows) totaled $205 billion during Q2. The April through June period was led by US equity (e.g., stock) ETF flows, although those were slightly below the prior quarter and well below their blockbuster Q4 2023 flows.
Source: Fidelity Investments, Bloomberg, as of 06/30/2024.
The S&P 500 added another 4% during Q2, which helped provide stock ETF flows with momentum. Equity ETFs saw $129 billion in flows during Q2, with roughly $100 billion accumulated by US equity ETFs and another $20 billion by international equity ETFs. Equity ETF flows have now outpaced fixed income (i.e., bond) ETF flows 5 straight quarters.
Source: Fidelity Investments, Bloomberg, as of 06/30/2024.
Fixed income flows have continued to bounce back from a weaker 2023. The $68 billion in fixed income flows during Q2 were led by more than $50 billion in US fixed income, of which aggregate bond ($25 billion) and government/Treasury ($21 billion) ETFs made up the bulk of those flows. The remainder were from international fixed income flows.
Sector flows go in different directions
Sector-themed ETFs exhibited some unusual behavior during Q2. As stocks rallied and investors were broadly willing to take on more risk, defensive sectors mostly experienced outflows—including real estate and health care. But so too did energy, consumer discretionary, and materials sector ETFs.
Meanwhile, utilities (also a defensive sector) saw the third strongest inflows, joining financials, tech, and industrials as the 4 sectors with positive net flows during Q2.
Source: Fidelity Investments, Bloomberg as of 06/30/2024.
It’s worth noting that tech and industrials are the only 2 sector-themed ETFs that saw positive flows during both the first and second quarters of 2024. This tracks with the momentum that’s been behind these 2 sectors for multiple quarters—spearheaded by the strength of the so-called Magnificent 7.
Active ETFs grow, spot bitcoin ETFs slow
The active ETF fund flow growth story continued last quarter. Of the 133 ETFs that were launched in Q2, 101 were actively managed ETFs.
During the first half of 2024, actively managed ETFs accounted for $126 billion (31%) of ETF industry flows. And there appears to be room to grow, as they still represent just 8% ($695 billion) of ETF assets. Looking at active vs. passive ETF flows year to date, active fixed income appears to have made more headway in catching up to passive ETF flows.
Source: Fidelity Investments, Bloomberg, as of 6/30/2024.
In terms of digital currency ETF trends, spot bitcoin ETF flow growth slowed substantially from Q1—when the first-ever spot bitcoin ETP debuted (an ETF is a type of ETP). The 9 spot bitcoin ETFs that launched in January gathered $6 billion in Q2, down from $27 billion in Q1. Nevertheless, ETF industry watchers are still anticipating more spot cryptocurrency ETPs to launch during the remainder of the year.
Looking for ETFs?
ETF flows can be a useful tool to help identify market trends, and to see where investors are broadly putting their money. If you are interested in investing in ETFs, Fidelity's ETF Screener can quickly sort through a lot of data based on the filtering selections you make.
You can search for ETFs using a variety of characteristics, like the fund's objectives, fundamentals, technicals, performance, volatility, trading characteristics, tax considerations, and analyst ratings.
Find the right ETF for you
Use our screener to identify ETFs and ETPs that match your investment goals.
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