Global inflows into exchange-traded funds (ETFs) are on track to hit record highs this year, with investors continuing to pour money into the market despite volatility and the traditional summer slowdown. According to BlackRock data, ETFs attracted a net $129.7 billion in August, a slight drop from July’s record of $198 billion but still above the 2024 monthly average. This comes even as the S&P 500 index saw a sharp 6% drop over three trading days early in the month.
Year-to-date net inflows now stand at $969 billion, far outpacing the $848 billion recorded during the same period in 2021, which ended with a full-year total of $1.3 trillion in ETF inflows.
Despite market turbulence, ETF asset flows remain robust due to the dominance of passive and automated investing strategies, such as monthly pension plan contributions, said Syl Flood, senior product manager at Morningstar. “It’s hard to move that mountain in terms of flows,” he added.
Analysts pointed out that investors have become less likely to respond en masse to market sell-offs unless there is a major global event, such as a pandemic or large-scale conflict, driving them to exit the market.
U.S.-domiciled ETFs performed particularly well in August, attracting $73 billion, more than double the historical monthly average. Global flows into Japanese equity ETFs also rebounded strongly, with $2.5 billion in inflows after three consecutive months of outflows totaling $8.7 billion.
Fixed-income ETFs continued to show strength, with year-to-date flows reaching $288 billion, surpassing the $195 billion at this point in the record-breaking year of 2021. Much of this buying is driven by expectations of central bank easing and portfolio rebalancing in response to surging equity prices.
Even though technology remains the most popular equity sector, demand for defensive sectors such as financials and utilities continues. In fixed income, government bond ETFs attracted $18.7 billion, while investment-grade corporate bonds saw $7.9 billion in inflows. High-yield bond ETFs, however, only managed to pull in $0.8 billion, and demand for emerging market debt remains weak.
Emerging market ETFs saw a notable split, with U.S.-based investors pulling $700 million out of emerging market equities and $1.3 billion from China ETFs, marking the worst three-month run for China-focused ETFs in 15 years. On the other hand, BlackRock reported $22 billion in global inflows into emerging market equity ETFs, likely driven by China-listed funds investing in domestic markets.
JPMorgan’s Ireland-domiciled ETF range saw record monthly inflows of $1.7 billion in August, with the actively managed JPMorgan Global Research Enhanced Index Equity (ESG) Ucits ETF (JREG) and its U.S.-focused counterpart (JREU) leading the charge. JPMorgan’s global ETF range has shown an impressive trailing 12-month organic growth rate of 102%, far outpacing competitors like Vanguard and iShares.
Meanwhile, Vanguard recorded an 11.6% growth rate, iShares 9.4%, and State Street Global Advisors (SSGA) just 1.7%, underscoring JPMorgan’s accelerating ETF growth.