ETF Exodus: 2024 Begins With Sharp Cash Outflows, Reversing 2023's Inflow Surge
Portfolio Pulse from Neil Dennis
The ETF market experienced net outflows of $1.103 billion in the first two weeks of 2024, reversing the inflow trend of 2023. The Vanguard Real Estate ETF (VNQ) is down 3% in January amid sector-wide outflows, particularly in real estate. Rising geopolitical tensions and Federal Reserve rate cut expectations have impacted market sentiment. In contrast, 2023 saw strong inflows, with BlackRock's iShares, Vanguard, and State Street's SPDR leading in AUM. Crypto-related ETFs, specifically VanEck Digital Transformation ETF (DAPP) and Global X Blockchain ETF (BKCH), performed well in 2023 but are down in early 2024.
January 17, 2024 | 5:29 pm
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NEGATIVE IMPACT
Global X Blockchain ETF (BKCH) returned 253% in 2023 but has started 2024 with a downward trend.
Similar to DAPP, BKCH is likely to be affected by the market's reevaluation of assets that performed exceptionally well in the previous year.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
VanEck Digital Transformation ETF (DAPP) had a standout performance in 2023 with a 255% return but is facing declines in the early weeks of 2024.
DAPP's decline in the short term is likely due to the broader market sentiment and a pullback from the exceptional gains in 2023.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Vanguard Real Estate ETF (VNQ) experienced outflows and is down 3% in January 2024, reflecting broader market concerns and sector-specific challenges.
VNQ is directly impacted by the sector-wide outflows, particularly in real estate, which is likely to negatively affect its price in the short term.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
NEUTRAL IMPACT
BlackRock Inc (BLK) continued as the top global promoter of ETFs in 2023 with iShares reaching over $3.5 trillion in AUM.
While BLK's iShares performed well in 2023, the current outflows may not significantly impact BLK's short-term price due to its diversified offerings and large AUM.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
State Street Global Advisors (STT) ranked third in AUM for its SPDR series of ETFs in 2023 with $1.3 trillion AUM.
STT's position as a top ETF provider with significant AUM in 2023 suggests a stable outlook, but the overall ETF outflows may not have a major short-term impact.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70