Long-term US funds pulled in $721 billion in 2024, equivalent to 2.7% of year-end 2023 assets. That rate was the best since 2021, and the third-best mark over the past 10 years. December saw $97 billion of inflows, bringing the fourth-quarter total to $294 billion. Only sector-equity funds and allocation funds suffered net outflows in 2024; the remaining eight category groups enjoyed inflows.
After overtaking active fund assets for the first time ever in 2023, passive funds extended their market share advantage in 2024. About 53% of assets in long-term open-end funds and exchange-traded funds are now in indexed strategies. There is little evidence that this trend will revert.
Investors piled a record $1.1 trillion into ETFs in 2024 behind soaring stock markets and an ever-expanding menu of offerings. That avalanche of inflows propelled ETFs' total assets past $10 trillion. That translates to about one third of the total US fund market -- a dramatic leap from ETFs' 14% market share at the end of 2014 and 5% share as of 2004.
Active US Equity Funds' Steep DeclineThe three largest category groups all ended the year with a lower share of assets in actively managed funds than ever before. However, the trend for taxable-bond funds was nearly flat, while international equity funds saw a modest shift. Active US equity funds, however, continued to languish. They now hold just over a third of the category group's overall asset base.
US equity funds took in $167 billion in 2024, but most categories within the group suffered outflows. Passive large-blend funds took in $284 billion, as behemoths like Vanguard 500 Index Fund continued to eat up the landscape. Mid- and small-cap blend funds also enjoyed decent flows, though they were similarly bolstered by index funds. Mid-growth funds, which skew toward active, had their second-worst year on record in terms of growth rate.
Flows into index bond strategies were predictably solid in 2024, and actively managed funds rounded back into form after a rocky two years. That balance helped the taxable-bond cohort rake in $482 billion on the year, triple the next-closest category group. That marked its best haul since 2021 and translated into a 9.3% organic growth rate.
Alternative funds reeled in $46 billion in 2024, double the $23 billion record set in 2021. The advent of spot bitcoin funds made all the difference. Launched in January, the "new nine" spot bitcoin ETFs helped the digital assets category collect $13 billion in the first quarter, then closed the year by collecting $22 billion in the fourth, the bulk of which came after the US presidential election.
IShares raked in $287 billion to lead all fund families for the third consecutive year. Vanguard ranked second with $222 billion, followed by Fidelity at $104 billion and State Street Global Advisors at $80 billion. These families are united by the immense capital stashed in their passive offerings. That has helped them steadily gain market share, or, in the case of the once-active-focused Fidelity, claw some of it back.