Data and analytics provider Trackinsight has released the results of the Trackinsight Global ETF Survey 2024 which seeks to shed light on the trends affecting the ETF industry and on the concerns of ETF investors globally.

Trackinsight’s Global ETF Survey aims to take the pulse of the ETF industry.

Supported by JP Morgan Asset Management and State Street, the survey polled over 500 investors globally including some of the world’s largest asset managers, financial advisors, private banks, family offices, and institutions that collectively manage more than $900 billion in ETF assets.

Philippe Malaise, CEO of Trackinsight, commented: “This year’s Global ETF Survey underscores the vibrant expansion and the transformative potential of the ETF industry. Our collaboration with JP Morgan and State Street has enabled us to present a report that not only captures the current state of the market but also offers forward-looking insights that will benefit investors and industry stakeholders alike. The findings highlight the adaptability of ETFs to market changes and investor needs, reinforcing their essential role in contemporary investment strategies.”

ETF market overview

According to Trackinsight’s data, global ETF inflows totaled approximately $837 billion in 2023, not surpassing the 2021 peak of $1.20 trillion but still marking a $66 billion increase from 2022.

ETF assets worldwide grew to nearly $11 trillion at the end of 2023, reflecting a 17.2% annual growth rate over the last decade. North America accounted for the majority of global ETF AUM at $8.4 trillion, followed by the EMEA region at $1.7 trillion, and APAC at $741 billion.

Last year also saw asset managers broadening offerings with innovative strategies to match varying market cycles and investor needs, increasing the total number of global ETFs (excluding other ETPs) to 8,990, compared to 8,393 in 2022 and 5,738 in 2018.

The recent survey indicates a growing inclination towards ETFs, particularly within equity funds where 25% of investors plan to boost their equity ETF holdings by more than 20%, and nearly half aim for a 5%-20% increase, highlighting a bullish sentiment towards the equity market. Fixed income ETFs are expected to see a period of stability, with 41% of respondents planning to keep their investments unchanged and roughly a third considering a slight uptick. Commodities and multi-asset ETFs are anticipated to remain stable, with most investors preferring to maintain their current investment levels.

Active ETFs

While most global ETFs remain index-based, actively managed ETFs have become increasingly popular, offering a new avenue for investors seeking potential alpha generation and specific outcomes while managing risks.

In North America, these strategies accounted for a significant 25% of ETF inflows in 2023, a substantial increase from 10% in 2018, culminating in a record $630 billion in assets under management. This growth is partly fueled by the trend of mutual fund to ETF conversions, encouraged by ETFs’ tax efficiency and regulatory support, with over 70 conversions recorded since 2021. A notable 80.1% of US investors now express a preference for active ETFs over mutual funds, underscoring a shift towards the flexibility and benefits of the ETF structure.

In Europe, where active ETF assets reached $32 billion, up from $10 billion in 2018, the market shows a slower adoption rate, highlighting a continued preference for passive strategies. However, JP Morgan Asset Management has made significant strides, particularly with its ESG-focused active ETFs, which drew $5.6 billion in net new assets in 2023 alone. This influx has boosted the firm’s active ETF assets under management to $14 billion.

Travis Spence, Head of ETF Distribution in EMEA at JP Morgan Asset Management, commented: “ETFs remain one of the fastest growing parts of the asset management industry and with nearly 80% of ETF buyers in EMEA planning to increase their allocation to active ETFs in the next couple of years, we believe the future of ETFs is active. Not only are we seeing existing ETF buyers starting to rotate into active ETFs, we’re also starting to see users of traditional active management increasingly embracing the ETF wrapper, alongside mutual funds. We’re also seeing increasing interest in active fixed income ETFs which can allocate towards higher-quality issuers and away from those issuers at risk of downgrades. Active management can produce better investment outcomes, particularly when it comes to sustainable investing, where fundamental active research can take into account financially material factors, combined with engagement.”

Fixed income revival

In 2023, the fixed income sector experienced a significant resurgence, pushing global ETF assets in this class to surpass the $2 trillion mark. Europe played a pivotal role in this growth, with inflows reaching $66 billion, effectively doubling from the year before and nearing the half-trillion-dollar threshold in total regional assets.

ESG ETFs

Europe solidified its position as a global frontrunner in the ESG space in 2023, channeling an extra $50 billion into ESG-focused ETFs. This surge bolstered Europe’s dominance, securing a 75% stake in the worldwide $550 billion ESG ETF market. Meanwhile, in the United States, political contention across the spectrum has widened the divide, hindering similar progress.

Thematic ETFs

In 2023, global enthusiasm for thematic investing remained modest relative to the pandemic peak. The spotlight shone on AI, Robotics, and Automation themes, capturing $3.6 billion in inflows across the US and Europe. Meanwhile, the Nuclear Energy theme experienced a notable upsurge in the US, attracting $1 billion in fresh capital. Europe’s dedication to achieving Net Zero by 2050 and addressing Climate Change continued robustly, with these themes drawing over $10 billion in new investments.

Crypto ETPs

In 2023, rumors of US approval for spot bitcoin ETFs reignited global interest in cryptocurrency ETPs, leading to inflows exceeding $1.5 billion in North America and $1 billion in Europe, signaling an end to the ‘crypto winter’.

The US has since surpassed Europe and Canada in the cryptocurrency ETP sector following the significant approval and launch of spot bitcoin ETFs on American exchanges earlier this year.