ETF Sales Rocket Upward in October

Everything is coming up ETFs.

Last month marked the latest record for inflows to exchange-traded funds, continuing a trend that has pushed asset levels higher and encouraged numerous funds to add products to an ever-growing pile. US ETFs garnered $171 billion in new assets in October, lifting year-to-date net sales to more than $1.1 trillion, nearing the total inflows in all of 2024, according to a report late last week from State Street Investment Management’s Global Head of Research Strategists Matthew Bartolini. Coupled with an equity market rally of 16% year-to-date through October, that seems encouraging … almost, he wrote.

“Similar to the Gilded Age’s titans of industries, much of the market’s strength is concentrated in a handful of tech-focused firms — like the Magnificent Seven and leaders in artificial intelligence,” he said. “And this narrow leadership masks some underlying weakness. In fact, 48% of US equity firms are down this year, and 70% are trailing the overall market.”

Actively Engaged

In any case, it’s a good time for active management. During the first three quarters, active ETFs pulled in more money than ever, and the number of such products recently surpassed the count of passive ETFs, thanks in part to the wave of niche funds recently added to the market. Through September, active ETFs raked in $338 billion, which is more than all of 2021 through 2023 combined, Morningstar Associate Manager Research Analyst Brendan McCann wrote in a report published Tuesday.

Some of the highlights around active ETFs this year, per Morningstar:

• JPMorgan brought in more sales than anyone, at nearly $45 billion, led by flows into its Nasdaq Equity Premium Income ETF (JEPQ) and Equity Premium Income ETF (JEPI).
• The iShares US Equity Factor Rotation Active ETF (DYNF) led all others by sales, at $10.1 billion.
• First Trust, Innovator and YieldMax launched the highest numbers of active ETFs, at 24, 23 and 19, respectively. For the third quarter alone, State Street launched the most products, at 14.

And Then There Are Dual Share Classes: The SEC’s pending approval of dual share classes “should push active ETFs’ market share even higher,” McCann noted. “That’s good for investors since ETFs usually charge lower fees and are more tax-efficient, allowing investors to keep more of their gains.”