Exchange-traded fund inflows have already topped monthly records in 2024, and managers believe inflows could see the impact of the money market fund boom before the end of the year.
“With $6 trillion plus money parked in money market funds, I think that’s really the biggest wild card for the rest of the year,” ETF Store president Nate Geraci told CNBC’s “ETF Edge” this week. “Whether it’s inflows into REIT ETFs or the broader ETF market, that’s going to be a real potential catalyst to watch here.”
Total assets of money market funds reached a new high of $6.24 trillion last week, according to the Investment Company Institute. Assets have reached a peak this year as investors wait for the Federal Reserve to cut interest rates.
“If that yield goes down, money market fund returns should go down,” Matt Bartolini of State Street Global Advisors said in the same interview. “So, as rates come down, we should expect some of the capital that’s been out in cash to start coming back into the market when cash cools down again.”
Bartolini, head of the firm’s SPDR Americas Research, sees money moving into stocks, other high-yield areas of the fixed-income market and parts of the ETF market.
“I think one of the areas that I think is probably going to get a little bit more is around gold ETFs,” Bartolini added. “They had about 2.2 billion inflows in the last three months, very strong last year. So I think the future is still bright for the overall industry.”
Meanwhile, Geraci expects to benefit from large, megacap ETFs. He also thinks the transition could be encouraging for ETF inflow levels as they approach a record $909 billion in 2021.
“Assuming stocks don’t experience a big pullback, I think investors will continue to position here and ETF inflows could break this record,” he said.
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