Exchange-traded fund inflows have reached record levels in 2024, with experts predicting that the money market fund boom could further impact inflows before the end of the year.
Nate Geraci, president of The ETF Store, believes that the $6 trillion plus parked in money market funds is a significant factor to watch. He stated on CNBC’s “ETF Edge” that this could be a potential catalyst for flows into REIT ETFs and the broader ETF market.
According to the Investment Company Institute, total assets in money market funds have surged to a new high of $6.24 trillion. This influx of assets is driven by investors awaiting a Federal Reserve rate cut.
Matt Bartolini, head of SPDR Americas Research at State Street Global Advisors, anticipates that as interest rates fall, capital from money market funds will flow into stocks, higher-yielding fixed income products, and various segments of the ETF market.
Bartolini specifically highlights the increasing inflows into gold ETFs, which have seen $2.2 billion of inflows over the past three months. He remains optimistic about the industry’s future growth potential.
Geraci is bullish on large, megacap ETFs benefiting from this transition. He believes that ETF inflows could surpass the 2021 record of $909 billion as long as there is no significant stock market downturn.
In conclusion, the outlook for ETF inflows remains positive, driven by the potential reallocation of funds from money market accounts to various investment vehicles. The industry is poised for continued growth, with experts keeping a close eye on market developments and investor behavior.
