Estimate Time4 min

Stock ETFs in demand

Key takeaways

  • ETF demand surged yet again in Q1.
  • Actively managed ETF flows posted another strong quarter of growth.
  • Spot bitcoin ETP flows stormed out of the gate.

Another quarter, another quarterly torrent of ETF flows. US-listed ETFs gathered nearly $200 billion in Q1 flows, which is a nearly 150% increase compared to Q1 (i.e., first quarter) 2023 inflows. And several trends from 2023 appear to have spilled over into 2024.

Here are the key happenings in ETFs.

Stock ETFs lead the rush

Of the roughly $200 billion gush in ETF net flows, which are inflows less outflows, US equity (i.e., stock) ETFs dominated another quarter (see Q1 2024 US-domiciled ETF flows in billions chart below). The S&P 500 gained more than 10% during Q1, rising above 5,000 for the first time ever, and investors rode that momentum via ETFs in large part.

Chart is described in the text above the chart
Source: Bloomberg, as of 03/31/2024. EM equity = Emerging market equity.

Broad-based stock index funds saw a majority of the inflow activity last quarter, and stock ETF flows have now outpaced fixed income (i.e., bond) ETF flows 4 straight quarters.

With that said, bond ETF flows—which slowed for most of 2023 before picking up during the last 3 months of the year—took in a relatively strong amount of net flows during Q1. Of the roughly $40 billion in bond ETF flows, intermediate/long duration ETFs saw inflows, while short/ultrashort names experienced outflows.

At the sector level, defensive sector ETF net flows generally outperformed cyclical sectors. The outlier for this trend during Q1 was technology-focused ETFs, which attracted the most inflows by far (+$9.5 billion), while utilities (–$2.3 billion) led outflows (see US sector ETF flows in billions chart).

Chart is described in the text above the chart
Source: Bloomberg as of 03/31/2024.

Momentum appears to have played a role in Q1 sector flows, as technology was the leader in 2023 (+$6 billion) and energy had the 2nd most outflows (–$8 billion). Health care, which saw the most outflows in 2023 (–$11 billion), was able to swing to inflows during Q1, potentially signifying a change in the outlook for that sector.

Actively managed, bitcoin ETPs gain steam

One of last year’s burgeoning trends was the increasing prevalence of actively managed ETFs. That continued in Q1. Of the 138 ETFs that launched during the first 3 months of 2024, actively managed ETFs accounted for 90.

In terms of net flows, actively managed ETFs took in $60 billion (30% of ETF industry inflows), while still only accounting for 7% of assets. Of that $60 billion, more than half flowed into equity ETFs and less than a third went to fixed income ETFs. Despite the significant growth in actively managed ETF flow growth in recent quarters, passive funds are still seeing substantially larger flows (see Active vs. passive ETF flows YTD in billions chart below).

Chart is described in the text above the chart
Source: Bloomberg, as of 03/31/2024

And perhaps no trend in recent memory has captured headlines among ETFs more than the January 2024 approval of the first ever spot bitcoin ETP (an ETF is a type of ETP). The 9 spot bitcoin ETPs launched in January stormed out of the gate, accumulating more than $27 billion in Q1 net flows. ETF industry watchers are anticipating many more of these types of ETPs to launch in 2024.

Looking for ETFs?

ETF flows can be a useful tool to help identify market trends, and to see where investors are broadly putting their money. If you are interested in investing in ETFs, Fidelity's ETF Screener can quickly sort through a lot of data based on the filtering selections you make. You can search for ETFs using a variety of characteristics, like the fund's objectives, fundamentals, technicals, performance, volatility, trading characteristics, tax considerations, and analyst ratings.

Find the right ETF for you

Use our screener to identify ETFs and ETPs that match your investment goals.

More to explore

Get started trading

Get industry-leading research, guidance, tools, and pricing. Open an account.

Exchange-traded products (ETPs) are subject to market volatility and the risks of their underlying securities, which may include the risks associated with investing in smaller companies, foreign securities, commodities, and fixed income investments. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. ETPs that target a small universe of securities, such as a specific region or market sector, are generally subject to greater market volatility, as well as to the specific risks associated with that sector, region, or other focus. ETPs that use derivatives, leverage, or complex investment strategies are subject to additional risks. The return of an index ETP is usually different from that of the index it tracks because of fees, expenses, and tracking error. An ETP may trade at a premium or discount to its net asset value (NAV) (or indicative value in the case of exchange-traded notes). The degree of liquidity can vary significantly from one ETP to another and losses may be magnified if no liquid market exists for the ETP's shares when attempting to sell them. Each ETP has a unique risk profile, detailed in its prospectus, offering circular, or similar material, which should be considered carefully when making investment decisions.

ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses.

Spot bitcoin ETPs are for investors with a high risk tolerance.  It invests in a single asset, bitcoin, which is highly volatile and can become illiquid at any time. A spot bitcoin ETP is not an investment company registered under the Investment Company Act of 1940 (the “1940 Act”) and is not subject to regulation under the Commodity Exchange Act of 1936 (the “CEA”). As a result, shareholders do not have the protections associated with ownership of shares in an investment company registered under the 1940 Act or the protections afforded by the CEA. The performance of a spot bitcoin ETP will not reflect the specific return an investor would realize if the investor actually purchased bitcoin. Investors will not have any rights that bitcoin holders have and will not have the right to receive any redemption proceeds in bitcoin. The S&P 500® Index is a market capitalization–weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent US equity performance.

Past performance is no guarantee of future results.

All the data presented within are from Fidelity Investments and Bloomberg, as of April 10, 2024. These data do not reflect mutual fund data, and investors who would like to monitor the entire fund flow universe may want to consider flows going into or out of mutual funds.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917