As the largest global ETF service provider, we have a unique perspective on the market, and at the beginning of each year, we offer our insights and predictions about the trends that will shape the markets globally.

At the start of 2024, we identified four major megatrends driving ETF growth, including:

1. Continued innovation by providers and investors
2. A growing preference of younger cohorts for ETFs over mutual funds
3. Expanded availability of active ETFs across markets and issuers
4. A solid majority of investors indicating that they will increase their portfolio allocation to ETFs during the next two-to-three years

As we take a midpoint look at the market, we see these megatrends clearly unfolding.

On the innovation front, 2024 marked the first spot crypto launches in Australia, Hong Kong and the United States. Active ETFs continue to hold the leaderboard for new global ETF launches. We have now seen 17 exemptive relief filings in the US for permission to launch ETFs as a share class of an unlisted mutual fund. ETF issuers are launching high dividend- and options-based products as advisors and investors demand higher yield and downside protection. France and Taiwan have become the latest markets to approve the ability to launch and list actively managed ETFs.

Regarding younger investors’ affinity for ETFs, recent surveys^2,3 have found that millennials and Gen-Xers prefer ETFs over mutual funds, leading to the expansion of retail utilization of ETFs. Direct retail ownership now exceeds US$2 trillion⁴ in the US, and Europe is expected to see the expansion of retail ownership via ETF savings plans from 7.6 million investors in 2023 to 32 million investors in 2028.⁵ Markets in Australia and Taiwan are seeing expanded retail adoption, with over 73 percent of Australia’s ETF investors⁶ coming from the retail channel and 75 percent of all Taiwanese investors⁷ leveraging ETFs in their portfolios.

As we have been tracking for years, actively managed ETFs continue to expand across issuers and markets. At the halfway point of 2024, active ETFs account for US$923 billion in assets and US$154 billion in net inflows, on track for over US$300 billion for the year. This would be close to double last year’s record inflows. Additionally, 33 new issuers launched active ETFs for the first time and 378 new products came to market globally.⁸ In April, the Autorité des Marchés Financiers (AMF) in France updated its regulations to allow active ETFs to list, and in July the Financial Supervisory Commission (FSC) announced draft guidelines that would allow the issuance of active ETFs in Taiwan.

The 2024 Trackinsight survey revealed that a vast majority of investors are planning to increase allocations to ETFs. At State Street, we have witnessed the growing momentum around ETFs: So far in 2024, we are servicing more than a dozen clients that have launched or are in the process of launching ETFs for the first time, or in a new jurisdiction for the first time.

As evidenced by record assets under management and flows so far in 2024, our predictions are certainly on track. But just how good do they look at the halfway point?