Jefferies Predicts Strong ETF Inflows in Second Half of 2024
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Expectations for Exchange-Traded Fund Inflows
Analysts at Jefferies are optimistic about the potential for substantial exchange-traded fund (ETF) inflows in the second half of 2024. Building on momentum from the first half of the year, they predict that the activity will continue to ramp up.
Current Inflow Trends
As of August, global ETF inflows have reached an impressive $809 billion, surpassing the six-year annual average of $752 billion. Notably, historical data shows that 57% of annual ETF flows typically occur in the latter half of the year, hinting at an exciting influx ahead.
Historical Data and Projections
According to the analysts, if historical patterns hold true, there is reason to believe that the second half will outperform the first. Since 2010, the average inflow increase in the second half compared to the first has been a significant 37%.
Active ETFs on the Rise
Active ETFs are particularly gaining traction, with inflows totaling $151 billion year-to-date through July, representing 29% of total industry inflows. These inflows are notably divided, with fixed income accounting for 37% and equities for 31%. In fact, the current year is tracking well above the annual average of $34 billion since 2010.
Comparative Performance of Active and Passive ETFs
When the focus shifts to the U.S. market, active ETFs have experienced an average increase of 18% in the second half, while passive funds typically see an impressive 57% increase. This highlights the dynamic nature of the ETF landscape.
Market Concentration Insights
Jefferies also emphasizes the heavy concentration in the ETF market, where the top five firms control approximately 84% of total ETF assets under management (AUM). Interestingly, while three of these top firms have been witnessing declining market shares since 2010, BlackRock remains a significant player.
Performance of Leading Firms
Despite having the largest market share, BlackRock (NYSE: BLK) has seen its control decrease from 45% to 31%. In contrast, Vanguard has increased its market share from 9% to 23%. Nevertheless, BlackRock has still managed to accumulate a remarkable $220 billion in ETF flows year-to-date as of August.
Opportunities in the International Market
The international ETF market presents even more opportunities for growth, as non-U.S. ETFs represent only 17% of AUM. In this sector, BlackRock holds a commanding 32% market share, with Invesco following at 15%. This suggests that the international market could develop further in the coming years.
Frequently Asked Questions
What are the expectations for ETF inflows in 2024?
Jefferies predicts strong ETF inflows in the second half of 2024, based on historical trends.
How much have global ETF inflows reached so far?
As of August, global ETF inflows have totaled $809 billion, surpassing the annual average.
What factors are contributing to the growth of active ETFs?
Active ETFs are seeing increased popularity, attracting a significant share of inflows, especially in fixed income and equities.
How concentrated is the ETF market?
The ETF market is highly concentrated, with the top five firms controlling around 84% of total assets under management.
What opportunities exist in the international ETF market?
There is potential for expansion in the international ETF market, where non-U.S. ETFs account for just 17% of assets under management.
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