As 2024 reaches the midpoint, VettaFi Voices Todd Rosenbluth and Cinthia Murphy joined Bloomberg’s Eric Balchunas and Joel Weber on the podcast Trillions. The four discussed the state of ETFs going into the 2024 halftime. “Time flies so fast,” Balchunas quipped.
One of the things that has made time seem to move so fast is that the market has been up. The S&P 500 is at record highs. Inflows keep flowing in. Product launches have seen tremendous success, particularly BlackRock’s spot bitcoin ETF, the iShares Bitcoin Trust Registered (IBIT).
The ETF Halftime Report
The four dug into asset classes to kick things off, starting with equities. Balchunas noted that equities had the fourth best half ever, taking in $211 billion. Rosenbluth shared that “after the strong year we had in 2023, it’s really encouraging to see money continue to go into equity ETF and in particular some of the broad asset allocation investment products.”
Murphy observed that a lot of money has gone into international equities. “We always talk about every year being the year of diversification into international and we’re actually seeing that this year,” she said. Much of this could be a valuation play.
Mind Your QQQ’s
The Invesco QQQ Trust Series I (QQQ) has been unstoppable in 2024. Balchunas asked, “What’s the point of investing anywhere else?” QQQ has a lot invested in the Magnificent 7, which have had a banner year so far. But Roundhill took it a step farther with the recently launched Roundhill Magnificent Seven ETF (MAGS), which is equally weighted into the Magnificent 7.
“It was that simple. You focus on those seven companies, eight stocks. That’s performed well even if some of those have dropped off,” Rosenbluth added.
The Trillions Take on Fixed Income ETFs
Fixed income had $89 billion in flows. Since the pandemic, Fixed income ETFs have become a go-to vehicle for institutional investors who like their liquidity.
Despite this, rate risks and fixed income uncertainty remain. “The behavioral data shows that, by far, people are playing around with and trying to build equities and even alternatives,” Murphy noted. “Fixed income is still that afterthought. Advisors are still not quite sure what to do about it. It might still be early innings, just going for easy button choices.”
Alternatives Discussed on Trillions
Alternatives are having their best half year ever, though Balchunas noted that if you take away the bitcoin ETFs, it is suddenly a very average first half for alternatives. That said, the bitcoin ETFs do exist. “Also interesting is commodities outflows this year.” Despite rising prices, gold is starting to see outflows,” he added.
Despite the potential skewing, investor sentiment might be brewing in a way that makes alternatives poised for a stronger second half. “We’re seeing advisors and investors looking for something else aside from stock and bond exposure using ETFs,” Rosenbluth noted
Active’s Rise
Active management has been seeing flows, leading some to speculate that the stock pickers are back. “I think branding power that has tapped into the space has made a difference,” Murphy added. Having star power helps smooth over rough edges, as investors won’t be willing to stick around with an unknown when things aren’t working.
Balchunas noted that covered call ETFs are also a component of active’s success. “The other thing is the fees finally got low for active,” he said.
You can listen to the entire episode of Trillions here.
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