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Exchange-traded funds set a quarterly record of $280 billion in inflows for the third quarter, continuing the momentum that has put issuers on track to surpass $1 trillion in yearly inflows and break their all-time, single-year high.
The four largest funds by assets under management (AUM), the equities-tracking $590 billion SPDR S&P 500 ETF Trust (SPY), the $527 billion Vanguard S&P 500 ETF (VOO), $440 billion Vanguard Total Stock Market ETF (VTI), the $527 billion iShares Core S&P 500 ETF (IVV), and the fixed income-targeting $119 billion Vanguard Total Bond Market ETF (BND) led the quarterly gainers.
"Speaking of records, ETFs just had their best quarter, evah," wrote Bloomberg Senior Analyst Eric Balchunas in an X post, adding, "YTD flows now up to $691b with a great shot at all time record."
ETFs Soar Along With Wider Markets
This latest surge following strong first and second quarters reflected an uptick in investor optimism about inflation and the economy and the ongoing voracious appetite for ETFs. Balchunas, who earlier this year predicted that ETFs would likely break the $1 trillion threshold, noted that inflows were already approaching $700 billion and that more than 2,000 funds "took in cash" in Q3.
SPY and VOO generated a combined $24 billion in inflows over the past month, according to etf.com data, with much of those increases coming after a hefty interest rate cut by the U.S. central bank that sent major indexes to multiple record highs. The S&P 500 and tech-heavy Nasdaq are up 3.5% and 4.5% respectively over this timeframe and have both risen roughly 20% year-to-date.
In an interview with etf.com, Balchunas linked ETFs' recent success to the recent market upturn and increasing embrace by once skeptical institutional investors. "Markets are firing on all pistons," he said, adding: "There are no holdouts."
In Tuesday trading, SPY, VOO, VTI and IVV were all slightly in the red on concerns that tensions in the Middle East would escalate after Iran fired a barrage of missiles toward Israel. The attack followed Israel's assassination of Hassan Nasrallah, the long-time leader of Iran proxy Hezbollah. BOND inched upward as investors sought refuge in tradition risk-off assets.