ETFs Are Set to Hit Record Inflows, But This Wild Card Could Change That
Money flowing into exchange-traded funds has been Top monthly record in 2024and managers say inflows could be impacted by a boom in money market funds before year-end.
“With over $6 trillion parked in money market funds, I think that’s really the biggest wild card for the rest of the year,” Nate Geraci, president of The ETF Store, told CNBC.ETF Edge“Whether it’s flows into REIT ETFs or just the broader ETF market, that’s going to be a really notable potential catalyst here.”
Total assets in money market funds hit a new high of $6.24 trillion last week, according to Investment Company Institute. Assets affected peak this year as investors wait for the Federal Reserve to cut interest rates.
“If those yields fall, the returns on money market funds will fall as well,” Matt Bartolini of State Street Global Advisors said in the same interview. “So as rates fall, we should expect to see some of the capital that was sitting out of cash when cash got pretty cold start to come back into the market.”
Bartolini, head of SPDR Americas Research, sees money flowing into stocks, higher-yielding sectors of the fixed-income market and parts of the ETF market.
“I think one of the areas that I think could grow a little bit more is around Yellow “ETFs,” Bartolini added. “They’ve had about $2.2 billion in inflows in the last three months, which is actually a strong close to last year. So I think the future is still bright for the entire industry.”
Meanwhile, Geraci expects large, large-cap ETFs to benefit. He also said the transition could hold promise for ETF inflows as they 2021 approach records $909 billion.
“Assuming stocks don’t fall too much, I think investors will continue to allocate here and ETF flows could break that record,” he said.
