Exchange-traded fund inflows have already surpassed monthly records in 2024, and managers believe inflows could be impacted by the money market fund boom before the end of the year.
“With that $6 trillion-plus parked in money market funds, I think this is really the biggest wildcard for the rest of the year,” Nate Geraci, president of The ETF Store, told CNBC’s “ETF Edge” this week. “Whether it’s flows into REIT ETFs or just into the broader ETF market, this will be a real potential catalyst to watch.”
Total assets in money market funds reached a new high of $6.24 trillion last week the Institute for Investment Companies. Assets have reached peak levels this year as investors await a rate cut from the Federal Reserve.
“If those yields decline, money market fund returns should decline as well,” Matt Bartolini of State Street Global Advisors said in the same interview. “So if rates fall, we should expect some of the capital that was sitting on the sidelines when cash was cool again to come back into the market.”
Bartolini, head of SPDR Americas Research at the firm, sees money moving into equities, other higher-yielding areas of the fixed income market and parts of the ETF market.
“I think one of the areas that I think will probably pick up a little bit more is there gold ETFs,” Bartolini added. “They have had inflows of about 2.2 billion in the last three months, a very strong close last year. So I think the future still looks bright for the industry as a whole.”
Meanwhile, Geraci expects large mega-cap ETFs to benefit. He also thinks the transition could be promising for ETF inflows approaching 2021 records of $909 billion.
“Assuming stocks don’t suffer a massive pullback, I think investors will continue to invest here, and ETF inflows could break that record,” he said.
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