(Bloomberg) -- Hype over artificial intelligence, the eagerly anticipated launch of Bitcoin funds, and billions of dollars flowing toward the seemingly unstoppable stock-market surge: ETFs have seen it all and been the beneficiary so far this year.
For one, exchange-traded funds have taken in more than $400 billion, the most in nearly three years. Investors went gangbusters over Bitcoin ETFs, which have attracted more than $14 billion since their January debuts. And a Nvidia Corp.-based fund has seen its assets grow by more than 2,000%.
What follows is a rundown of some of the major trends within the ETF space during the first half of 2024:
Equity Torrent
The ETF universe has attracted more than $417 billion since the end of 2023, on pace to be the most since the second quarter of 2021, according to data from Bloomberg Intelligence. Equity ETFs alone are on track to clock inflows of $262 billion for the six-month stretch, just shy of the total amount taken in during the second half of 2023.
During this period, the low-cost Vanguard S&P 500 ETF (ticker VOO) has garnered roughly $42 billion, on pace for its best year of flows. The tech-heavy Invesco QQQ Trust Series 1 (QQQ) has seen $14 billion come in, which is so far the most since 2021, data compiled by Bloomberg show.
“It’s a combination of a) robust performance from equities, and b) the onslaught of new issuers adding fire power to the overall tally,” said Todd Sohn, ETF strategist at Strategas.
Barrage of Bitcoin ETFs
Perhaps the most surprising standout of 2024 has been the bundle of new ETFs that directly hold Bitcoin, the largest cryptocurrency. More than 10 such funds launched at the start of the year with historic turnover and subsequent new all-time highs for the digital token itself.
Taking the Grayscale Bitcoin Trust (GBTC) — the only one in the batch to see outflows — out of consideration, the remaining funds have garnered a total of around $33 billion since inception. The iShares Bitcoin Trust (IBIT) has been the biggest beneficiary, with about $18 billion coming in this year. Investors have, meanwhile, yanked a similar amount from GBTC, which sports the highest fee among the bunch.
“The launch of spot-Bitcoin ETFs has been one of the most talked-about launches in the ETF world that simultaneously rekindled interest in the overall crypto market and created a precedent for the future of crypto ETFs,” said Roxanna Islam, head of sector and industry research at VettaFi.
Staying Active
Actively managed funds are a popular corner of the overall ETF market, with about $124 billion flowing toward such products in the first half of the year. That makes up 30% of the overall ETF-universe haul. Derivatives-based funds, meanwhile, have taken in $14.5 billion.
Issuers are trying to capitalize on the popularity of covered-call and other yield-focused funds with a slew of new launches. Within the universe of top-yielding ETFs tracked by Bloomberg Intelligence, a quarter have come to market over the past two years.
Nvidia Frenzy
The non-stop frenzy over Nvidia has fueled a record $2.7 billion inflow into a fund that gives investors two times the daily return of the tech behemoth and bellwether firm of the AI craze. The GraniteShares 2x Long NVDA Daily ETF (NVDL) started the year with around $210 million in assets, a number that’s ballooned to more than $5 billion currently.
While NVDL has returned 370% so far this year — making it one of the best-performing funds of 2024 — it gets hurt disproportionately when its underlying stock drops, as it did during a recent wipeout.
At least 35 ETFs with assets over $500 million each have Nvidia making up 10% or more of their portfolios, data compiled by Bloomberg show. Altogether, these funds have taken in more than $45 billion so far this year.
“It’s one of the stocks you don’t want to miss out on, so even if you’re not buying individual stocks, you’re going to allocate to ETFs with the largest exposure,” said Athanasios Psarofagis, an ETF analyst at Bloomberg Intelligence.
