Nvidia and Crypto Boom Drive $400 Billion ETF Surge in 2024

(Bloomberg) -- The year 2024 has been a rollercoaster ride for exchange-traded funds (ETFs). With the hype around artificial intelligence, the launch of Bitcoin funds, and billions of dollars flowing towards an unstoppable stock market surge, ETFs have seen it all. They have managed to attract over $400 billion so far this year—their highest in almost three years.

One of the major attractions was Bitcoin ETFs, which debuted in January. Since then, they've attracted more than $14 billion. The Nvidia Corp.-based fund saw its assets grow by a staggering 2,000%.

Here's a rundown on some important trends observed within the ETF space during H1-2024:

The equity torrent
Since the end of 2023, the ETF universe has successfully drawn more than $417 billion in investments. This puts them on track to reach their peak since Q2-21, according to Bloomberg Intelligence data.

Equity-based ETFs are expected to clock inflows worth about $262 billion for H1-24 alone—almost equivalent to what was achieved during H2-23.

Vanguard S&P 500 ETF (ticker VOO) acquired approximately $42 billion, making this their best year yet, while Invesco QQQ Trust Series 1 (QQQ), focused heavily on technology stocks, brought in roughly $14 billion—the most since '21 as per Bloomberg data.

Barrage of Bitcoin ETFS
This year witnessed an unexpected rise in new direct-Bitcoin-holding EFTS; these were launched at historic turnovers, leading to subsequent record highs for digital tokens themselves.

Excluding Grayscale Bitcoin Trust (GBTC)—the only one with outflows—the rest have garnered around $33 billion since inception, with iShares Bitcoin Trust (IBIT) being the top beneficiary, drawing nearly $18 billion just this year!

Roxanna Islam from VettaFi stated that these launches rekindled interest among investors in the crypto market and set a precedent for future crypto ETFs.

Active Management
Actively managed funds were another popular corner, attracting about $124 billion during H1-24—about 30% of the total ETF haul. Derivative-based funds also saw an inflow of around $14.5 billion.

Issuers have been trying to leverage the popularity of yield-focused funds like covered-call with new launches. Bloomberg Intelligence data shows that 25% of top-yielding EFTs came into the market over the past two years.

Nvidia Frenzy
The continuous frenzy over Nvidia led to record inflows worth $2.7 billion into GraniteShares 2x Long NVDA Daily EFT (NVDL), a fund offering investors twice daily returns from this tech giant leading the AI revolution. Starting at just $210 million, NVDL now boasts assets crossing a whopping $5 billion!

Despite performing exceedingly well with returns as high as 370%, it did suffer when its underlying stock dropped recently.

As per Bloomberg data, there're at least 35 ETFs with assets over half a billion dollars each, with Nvidia making up more than 10% of their portfolios; these funds have collectively attracted more than $45 billion so far this year.

In conclusion, Athanasios Psarofagis from Bloomberg Intelligence stated that, due to its promising performance, even those who do not invest directly in stocks are likely to allocate resources towards ETFs heavily exposed to Nvidia.