December 2024 marked a historic peak, with net inflows reaching $3.8 billion—the highest in ETF history. This surge brought the total for the entire year to an impressive $35 billion, surpassing the previous record of $23.2 billion set just three years earlier in 2021.
The dominance of the top four ETF issuers—Vanguard, Betashares, iShares, and VanEck—was certainly notable; these firms accounted for a staggering 96.4% of December's net flows and made up 98.8% of the annual flows for 2024.
VanEck's latest ETF Industry Pulse report also revealed that the total market capitalization of ETFs reached $247 billion, reflecting a robust year-on-year growth of 38%. This boom in popularity can be largely attributed to a diverse array of new products introduced by fund managers, with 64 fresh ETFs launched on the Australian Securities Exchange and CBOE throughout the year, boosting the total number of exchange-traded products in Australia to 401.
The report emphasized the growing popularity of international equities ETFs as a significant driver of industry growth. In 2024, these ETFs saw record net flows exceeding $15 billion, more than doubling inflows into local Australian equities. Last year, international equities ETFs ranked third in terms of flows, but they emerged as clear leaders in 2024, showcasing a remarkable shift in investor preferences.
Looking forward, the ETF market seems poised for continuous expansion. Projections indicate that market capitalization could surpass $250 billion by the first quarter and approach $300 billion by year-end.
Performance-wise, Bitcoin emerged as the top performer over the twelve months ending December 31, 2024, delivering an extraordinary return of 146.5%. This remarkable performance highlights the growing interest in cryptocurrency-themed investments. Other strong performers included US equities, which yielded returns of 38.2%, and global equities at 31.2%.
The Global X 21Shares Bitcoin ETF exemplified this trend, delivering annual returns of 146%. Concurrently, increasing optimism surrounding the US stock market, particularly following the presidential elections, has fueled significant gains for US-focused and technology ETFs. Notable examples include the Global X FANG+ ETF, which returned 12.3%, and the Betashares Strong US Dollar Fund, achieving 11.8%.
As illustrated by these findings from VanEck, the ETF landscape in Australia showcases resilience and growth potential, despite economic headwinds. The concentration of flows among a few key players may hint at a maturation phase in the market, but it also emphasizes the need for innovative products to capture a broader investor base.
As the ETF industry continues to evolve in 2025, stakeholders will be monitoring which trends take hold and whether emerging issuers can carve their niche in an increasingly competitive marketplace.
