U.S.-listed ETFs totaled $10.4 trillion in assets under management at the end of December, and flows for calendar year 2024 reached an industry record of $1.1 trillion. December saw ETF inflows of $146 billion, a drop of 7.5% from November’s number. Last month, 100 ETFs launched. For the year, just under 750 ETFs launched. Whether in “buffer” type ETFs, leveraged single stock, hedging, or complex options strategies, there has been a notable increase in ETFs using derivatives.
U.S. listed ETF flows (in millions) as of December 31, 2024
At the sector level, new money was put into Financials, Industrials, and Technology in 2024. Money was pulled from Energy, Health Care, and Communication Services. Perhaps this is an indication of positioning for the new administration.
U.S. sector fund flows (in millions) as of December 31, 2024
December saw 100 U.S. ETF launches, the majority being actively managed Equity funds (both U.S. and global exposure).
However, with U.S. equity markets trading at elevated levels, investors may be looking to invest in other asset classes. As such, several commodity funds launched in December. State Street’s SPDR Bloomberg Enhanced Roll Yield Commodity Strategy No K-1 ETF (CERY) launched with a significantly lower expense ratio than the segment average.
We saw seven fund conversions during December. Morgan Stanley converted two mutual funds to ETFs (MSLC and MSSM). Cannell & Spears converted a mutual fund to ETF (BEEX). Cambria along with ETF Architect converted separately managed accounts and individual positions to launch a tax-optimized strategy ETF (TAX). Tortoise Capital successfully converted three closed-end funds to ETF (TPZ).
This month we take a closer look at the growing use of derivatives in U.S. ETFs. Just over 20% of the ETFs currently available use derivatives. Below is an overview of how derivatives are commonly being used now. As you can see, buffer type ETFs have expanded the use of derivatives in the wrapper.
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