The theme song for the exchange-traded fund industry could very well be Frank Sinatra’s "It Was a Very Good Year," as the industry just hit $1 trillion annually in assets this month, faster than any other time in history.
"I think, largely speaking, you look across the different asset classes – stocks, bonds, commodities, gold, of course – it's been a very good year to own assets. Assets largely across the board have outperformed cash. So, it's just been a positive returning environment for assets. So, I think we have seen flows come in because of the sort of risk on type of behavior, but also the positive performance on assets," Matt Bartolini, global head of research strategists at State Street Investment Management, told FOX Business.
State Street manages more than $5 trillion in assets with clients in over 60 countries.
Last year, ETF inflows hit $1 trillion on Dec. 11, 2024. Bartolini correctly predicted the industry would top the $1 trillion mark by October 15, it hit that level a day early. Full-year totals are expected to reach $1.35 trillion, helped in part by bonds.
"Fixed income ETFs – those continue each year to just gain more and more in popularity. And now you have them breaking records through a full-year record just in the first nine months. And that's just because the use cases across fixed income ETFs have expanded beyond just simple beta building blocks to now contain more active strategies that have identifiable track records," he added. Bond ETFs nabbed $39 billion inflows last month.
Gold ETF inflows are also on fire, on pace to break annual records this year. Even as the price of the yellow metal continues to break records, trading above $4,100 an ounce.
SPDR Gold Trust ETF, the largest ETF backed by physical gold, has seen record inflows of $15.97 billion this year. The smaller SPDR Gold MiniShares Trust ETF has pulled in $6.8 billion, according to the firm.
ETF LEADER BOARD DOMINATED BY NIMBLE FUNDS
Bartolini and others outline the traditional case for owning gold:
There is also another bullish stat for the precious metal despite a market that may look over extended.
"The tonnage of gold is actually below the high watermark," Bartolini said. "So, the actual amount of gold tons that are being held is below that high watermark" suggesting further upside.
Gold prices have advanced more than 56% this year, while silver has jumped over 73% and is sitting at the highest level since January 1980.
The Arberdeen Physical Silver Shares ETF hit a record high Monday, while the iShares Silver Trust is hovering around a record as well.
