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The ETF industry saw explosive growth in 2024, as the space piled up huge assets amid the stock market surge. ETFs across various categories pulled in a record $1.12 trillion in capital last year, almost double the $600 billion of inflows seen in 2022 and 2023 each. This topped the previous record of $900 billion set in 2021.

U.S. equity ETFs led the way with $753.4 billion in inflows, followed by inflows of $303.5 billion in fixed-income ETFs and $43.8 billion in currency ETFs. In particular, cryptocurrency ETFs attracted billions of dollars of capital as the approval of spot Bitcoin ETFs in January 2024, as well as Trump’s crypto-friendly policies, resulted in a new era for the cryptocurrency market. However, most corners of the bond market struggled due to a rise in Treasury yields.

Vanguard S&P 500 ETF (VOO - Free Report), iShares Core S&P 500 ETF (IVV - Free Report), BlackRock's iShares Bitcoin Trust (IBIT - Free Report), Vanguard Total Stock Market ETF (VTI - Free Report), and Invesco QQQ Trust (QQQ - Free Report) were the top asset gatherers last year.

Behind the Stock Market Surge

Wall Street saw a blockbuster 2024. The Nasdaq Composite Index outperformed, rising 28.6%, while the Dow Jones advanced 12.9%. The S&P 500 climbed 23.3% after a 24.2% jump in 2023. This marks two consecutive annual gains above 20%, and the best two-year cumulative gain of 53.2% since 1997-98. 

The enthusiasm surrounding AI, the rate-cut wave, and hopes of growth under President-elect Trump's administration all drove the jump in stocks, though geopolitics and global growth slowdown concerns led to risk-off trades. The expansion of AI applications holds the promise of ushering in fresh growth opportunities in the tech sector and beyond.

The Fed cut interest rates three times in 2024 but signaled a more cautious approach heading into 2025 amid sticky inflation. Lower rates reduce borrowing costs for mortgages, credit cards, and other consumer and business loans. These help businesses expand their operations more easily, resulting in increased profitability. This, in turn, stimulates economic growth and boosts the stock market.

President-elect Donald Trump’s win in November also proved a boon for the market, fueling hopes of deregulation, lower corporate tax rates, and a focus on the U.S. economy, which has been resilient. 

Meanwhile, we have detailed the previously mentioned ETFs below.

Vanguard S&P 500 ETF (VOO - Free Report)

The Vanguard S&P 500 ETF topped the asset flow creation, pulling in $112.6 billion in capital. It tracks the S&P 500 Index and holds 504 stocks in its basket, each accounting for no more than 7.1% of the assets. The ETF is heavy on the information technology sector, while financials, consumer discretionary, and healthcare round off the next three spots with a double-digit allocation each. 

The ETF charges investors 3 bps in annual fees. It has AUM of $586.2 billion, and it trades in average daily volume of 4.5 million shares. The fund has a Zacks ETF Rank #1 (Strong Buy) rating with a Medium risk outlook.

iShares Core S&P 500 ETF (IVV - Free Report)

The iShares Core S&P 500 ETF has gathered $84.8 billion in assets. It tracks the S&P 500 Index and holds 503 stocks in its basket, with each accounting for no more than 7.4% of the assets. The ETF is heavy on the information technology sector, while financials, consumer discretionary, and healthcare round off its next three spots with a double-digit allocation each.

The ETF similarly charges investors 3 bps in annual fees, and it trades in an average daily volume of 4.5 million shares. It has an AUM of $588.2 billion, and a Zacks ETF Rank #1 (Strong Buy) rating with a Medium risk outlook.

iShares Bitcoin Trust (IBIT - Free Report)

The iShares Bitcoin Trust raked in $37.2 billion in capital in 2024. It seeks to reflect the performance of the price of Bitcoin. It enables investors to access Bitcoin within a traditional brokerage account. The fund charges 25 bps in annual fees from investors. The ETF has AUM of $52.1 billion, and it trades in an average daily volume of 52 million shares.

Vanguard Total Stock Market ETF (VTI - Free Report)

The Vanguard Total Stock Market ETF has accumulated $29.3 billion in capital. It provides exposure to the broader stock market by tracking the CRSP US Total Market Index. The ETF holds a large basket of 3,624 well-diversified stocks with key holdings in technology, consumer discretionary, industrials, healthcare, and financials. 

The ETF also charges 3 bps in fees per year from investors, and it trades in an average daily volume of 3 million shares. The ETF has amassed $458.2 billion in its asset base, and it has a Zacks ETF Rank #2 (Buy) rating with a Medium risk outlook.

Invesco QQQ Trust (QQQ - Free Report)

The Invesco QQQ Trust saw an inflow of $23.6 billion last year. It provides exposure to the 101 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. The ETF is moderately concentrated on the top three firms with at least 8% share each, while other firms hold no more than 6% of the assets. 

The Invesco QQQ Trust is one of the largest and most popular ETFs in the large-cap space, with an AUM of $321.7 billion and an average daily volume of 26 million shares. The ETF charges investors 20 bps in annual fees, and it has a Zacks ETF Rank #2 (Buy) rating with a Medium risk outlook.

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