When Did AUMs to ETFs Surpass Mutual Funds in Market Share and Growth

The rise of ETFs has been a remarkable phenomenon in the financial world. By 2018, ETFs had surpassed mutual funds in market share, with a record $3.5 trillion in assets under management (AUM).

This significant milestone marked a turning point in the industry, as ETFs continued to grow at an unprecedented rate. The shift was largely driven by investors seeking greater flexibility and diversification in their portfolios.

In the US, the ETF market grew by 20% in 2018 alone, outpacing mutual funds for the first time. This trend was a clear indication that investors were increasingly turning to ETFs for their investment needs.

As a result, the mutual fund industry saw a decline in its market share, with AUM falling to $3.2 trillion by the end of 2018.

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ETFs have become increasingly popular over traditional, active funds, with the EU ETF market growing to a new high of €1,814.2bn in assets under management.

This growth is driven by investor confidence, with inflows reaching €104.0bn in H1 2024. The EU ETF market continues to push the boundaries of what's possible, with record-breaking growth in assets under management.

Ireland and Luxembourg are the most popular ETF domiciles in Europe, accounting for 70.8% and 18.1% of cross-border registrations respectively. This is a testament to the trust investors have in these countries to manage their assets.

Equity ETFs are the dominant asset class within the EU ETF market, accounting for 73.3% of all EU-domiciled ETFs. This represents a 3.5% year-over-year increase, demonstrating the sustained growth of this asset class.

The growth of the ETF industry is also driven by the increasing demand for sustainable investment solutions. 36.5% of EU-domiciled ETFs are ESG ETFs, disclosing as per Article 8 or Article 9 of the SFDR. This is a significant milestone in the industry's shift towards more responsible investing.

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Mutual funds accounted for 48% of wirehouse assets in Q2 2022, but that share fell to just 42% in Q1 2024. This decline is a significant drop in a relatively short time frame.

Commission-based and rep-as-portfolio manager outflows have driven down mutual fund assets. These outflows have been a major factor in the decline of mutual funds.

ETFs now account for 34% of wirehouse assets, up from 31% in Q2 2022. This increase in market share is a significant trend in the industry.

SMAs represent 24% of wirehouse assets, up from 21% in Q2 2022. Direct index SMA has achieved an impressive two-year CAGR of 48%, indicating strong growth in this area.

U.S. equity SMAs were a major driver of Q1 flows, with direct index accounting for 50% of positive U.S. equity SMA net sales.

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