A Record-Shattering $1 Trillion Poured Into ETFs This Year
Assets in U.S. exchange-traded funds grew by more than 30% in 2024
By Jack Pitcher, The Wall Street Journal, Dec. 30, 2024
Investors plowed more than $1 trillion into U.S.-based exchange-traded funds in 2024, shattering the previous record set three years ago and raising Wall Street hopes for an even bigger year ahead.
The rebound from last year’s lackluster flows marked a broad embrace of U.S. assets in a year in which the S&P 500 gained around 25%…
Total assets in U.S.-based ETFs reached a record $10.6 trillion at the end of November, according to monthly ETFGI data, an increase of more than 30% from the start of 2024. …
The biggest S&P 500 funds led the inflow leaderboard as usual. Invesco’s QQQ, which tracks the tech-heavy Nasdaq-100 Index, followed, attracting more than $27 billion of fresh cash through mid-December. It was an eye-popping figure after QQQ brought in $7.3 billion in 2023… [end quote]
Holy Toledo! Talk about FOMO! If you add 30% of new assets into a market the demand will obviously drive prices higher. Should this “raise Wall Street hopes for an even bigger year ahead”? Only if the speculators pour even more new cash into an already historic bubble.
I’m not sure why the 30% number is so exciting. The Nasdaq went up by more than 30% and the S&P500 went up by more than 25%. That means that the vast majority of the increase in total ETF assets came from stock price appreciation within those ETFs, not from “new” money.
I am a little overweight cash again, just like I was in December 2021, but other than that my ETFs are riding the waves up and down just like they have for decades because I don’t know what else to do. A market can remain irrational for years.
Each of my Mexican Real Estate assets, multiple lots of vacant land as well as 2 houses and 1 condominium I bought at deep pre-sale pre-construction discount that is now under construction, have increased in value significantly more than the S&P.
I remain very leary of the current USA, politics and economics both. How leary? So leary that I am heavily invested in Mexico!
Mexico is chaotic, and its economy is a shattered spectrum from subsidized monopolies, crime mobs, and questionable infrastructure all the way out to rapidly growing engagement in international economies and exploding higher education. It has an almost ideal demographic structure to do well for the next thirty years, and also dwarfs most of its competition (Ecuador, Portugal) in attracting retirees from all over.
And, most importantly, if the USA thrives so does Mexico, and if the USA tanks Mexico can mostly just shrug.
You don’t think the Mexican economy isn’t heavily correlated with the US? IIRC, Mexico was a bigger trading partner with the US than China. I think that if the US gets pneumonia so does Mexico.
Mexico has a wider variety of exports that sell at prices below that of the US. That is why those items are made in Mexico in the first place. If the US gets pneumonia then Mexico gets the flu.
Looking at recent history, in 2009 US GDP dropped 2% from the previous year. Mexico’s went down 19%. In 2020 the US drop was 1%. For Mexico the drop was 14%. Things might not be as disparate in the future, but still…
The old saying is “When the USA catches a cold, the rest of the word catches the flu”. And this will remain true for a while yet. The USA is more like an empire, when it falls, it’s a HUGE event that happens, usually spawning revolutions and other kinds of worldwide dislocations. Like the fall of British empire caused all sorts of dislocations across the world, many of which persist even until today.
I wonder what that percentage is like in other years. Money tends to go where it is treated well, so momentum (stocks on the move) tends to attract funds.
In down markets correlations tend toward one, i.e., everything goes down, but higher beta stocks move more. When the v-shaped bottom is hit it is the “trash” stocks that rebound the most.