ETF inflows have already surpassed monthly records in 2024, and managers believe inflows could see a boost from the money market fund boom before the end of the year.
“With over $6 trillion in money market funds, I think this is the biggest bad sign for the rest of the year,” Nate Geraci, president of The ETF Store, told CNBC’s “ETF Edge” this week. “Whether it’s inflows into REITs or the broader ETF market, this is going to be a real potential catalyst worth watching.”
Total assets in money market funds hit a new record of $6.24 trillion last week, according to the Investment Company Institute. Assets have hit their highest levels this year as investors wait for the Federal Reserve to cut interest rates.
“If yields go down, then the yields on money market funds should go down as well,” Matt Bartolini of State Street Global Advisors said in the same interview. “So as rates go down, we should expect to see some of the capital that was sitting on the sidelines in the form of cash when cash was kind of cold again start to come back into the market.”
Bartolini, head of research at SPDR Americas, sees money moving into stocks and 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 pick up a little bit more is gold “ETFs have received about $2.2 billion in inflows over the past three months, which is a very strong close to last year,” Bartolini added. “So I think the future is still bright for the industry as a whole.”
Meanwhile, Geraci expects large-cap ETFs to benefit. He also believes the shift could bode well for ETF inflows as they approach their 2021 record of $909 billion.
“Assuming stocks don't see a big pullback, I think investors will continue to allocate here, and ETF inflows could break that record,” he said.
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