Investing.com -- Exchange-traded funds are reshaping global markets with record-breaking growth. In 2024, the ETF industry reached $15 trillion in assets, saw $1.6 trillion in inflows, and launched 1,485 new funds, according to a Bank of America note.
Divergences in asset performance and ETF flows are narrowing. Treasury ETFs attracted $28 billion despite losses, while outflows hit rallying sectors like energy and gold. Active ETFs overtook passive launches in 2024 for the first time. Over 120 mutual funds converted to ETFs, reversing outflows.ETFs are making illiquid assets like collateralized loan obligations accessible, with AUM in these funds surging 245% last year. Customized ETFs are also outperforming legacy indexes, with sector-specific funds, such as industrials and defense, leading the way.
ETFs have also become more sophisticated. Some now use AI or invest in derivatives and cryptocurrencies, further expanding their reach.