The global ETF industry accumulated $15.1 trillion in assets and attracted $1.6 trillion in flows during 2024, marking the strongest year on record for inflows, assets, fund launches and institutional ownership, according to a new Bank of America report.
The explosive growth reflects both retail and institutional investors increasingly embracing ETFs for their tax efficiency and liquidity advantages, BofA ETF strategists Jared Woodard, John Glascock, and Phoebe Block wrote in the report.
These benefits have helped save investors approximately $250 billion versus mutual funds since 2001, the analysis found.
Institutional investors in particular are fueling the expansion, with their ownership of ETFs rising 24 percentage points since 2016 to reach an average of 27% per fund, according to BofA data.
The shift comes as providers launch more sophisticated products targeting specific themes and sectors rather than broad market exposure, the report shows.
Active ETF launches surpassed passive ones for the first time in 2024, with 121 mutual funds converting to active ETFs and reversing prior outflows, according to the analysis.
Global expansion drove some of the growth, with funds listed outside the U.S. attracting $583 billion in 2024, representing 38% of total inflows, BofA found. For each U.S.-listed ETF, there are now 2.1 funds domiciled elsewhere.
Investors also embraced previously illiquid assets once offered in ETF form, particularly in the credit markets. Collateralized loan obligation (CLO) ETFs saw assets surge more than double in 2024. Investors also showed strong appetite for remixed sector funds focused on areas like industrials and defense.
Some disconnects emerged in 2024 that BofA expects to resolve this year. While banks, energy companies, and gold posted strong returns, their related ETFs saw outflows, according to the analysis.
Looking ahead, BofA predicts these positioning gaps will close as investors adjust to what analysts describe as an ongoing transition from a “2% world to a 5% world.” The firm also anticipates continued growth in active strategies and expansion into new asset classes.
