Goldman Sachs research shows that U.S. Exchange-Traded Funds (ETFs) have reached an unprecedented milestone, surpassing $8 trillion in assets under management (AUM) this week. This achievement is a further indication of the strength of the investment landscape in the United States, as major stock market indices remain at or near their record levels. For example, the S&P 500 has gained 25% this year and is only 1% away from its all-time high. Similarly, the Nasdaq 100, which comprises tech stocks, has surged 53% year to date and hit a record high on Tuesday.
The growth in the ETF market is not solely due to a bullish stock market, but also reflects the influx of fresh capital from investors who are optimistic about the broader market sentiment. Recent statistics from ETFdb.com highlight the significant inflows into several ETFs. In December, the SPDR S&P 500 ETF Trust saw $30.8 billion of inflows, bringing its AUM to $478 billion. The Vanguard S&P 500 ETF and Invesco S&P 500 Equal Weight ETF also experienced inflows of $5.5 billion and $4 billion, respectively.
Investors have also shown interest in bond-related ETFs, such as the iShares 20 Year Treasury Bond ETF, which has seen $3.6 billion of inflows this month. This diversification of investor interest demonstrates the shifting stance of the Federal Reserve and their impact on both equity and bond markets. The market seems to have optimism surrounding the so called “Santa Claus rally”.