July 3 (Reuters) - Inflows into exchange-traded funds in the U.S. totaled $411 billion in the first half of 2024 and could end up setting a record of $950 billion for the year as a whole, according to a report released this week by State Street Global Advisors.
That forecast is based on the assumption that ETF issuers see the traditional second-half uptick in flows tied to seasonal factors such as taxes. If U.S. stocks continue to rally, there is "a real puncher's chance of hitting $1 trillion" in inflows for the year, concluded the report's author, Matthew Bartolini, head of SPDR Americas Research.
Investors eagerly allocated fresh capital to growth stock ETFs and sector ETFs focusing on technology, while pulling money from ETFs that offer low volatility, State Street concluded.
Instead, investors are turning to buffered ETFs to manage the risk of losses, the report said, noting that this group had $15 billion of inflows in the last 12 months. A growing array of issuers are flocking to roll out new and more complex funds in this category, which use options strategies to provide different flavors of downside protection.
Actively-managed ETFs continue to shine, State Street noted, and are on track to double last year's record inflows of $133 billion. This rapidly-expanding category came within a few billion dollars of breaking that record in the first six months of 2024. The first half's $130 billion of inflows brought its streak of net inflows to 51 months in a row.
The prospect of higher-for-longer interest rates hasn't dampened investor appetite for bond ETFs. This category which saw $118 billion of inflows in the first half of the year, and $25 billion in June alone, according to the report. They are on target to set a new record of $237 billion for 2024 as a whole, State Street calculated.
(Reporting by Suzanne McGee; Editing by Aurora Ellis)
