Forget ‘Sell in May’: Investors Double Down on ETFs in Record Numbers

• ETF investors pour in $58 billion into equity ETFs in May 2024, defying the “Sell in May” adage.
• Fixed-income ETFs also surge, attracting $27 billion; their best month in over a year.
• Year-to-date ETF inflows hit +$315 billion, signaling an appetite for ETFs.

ETF investors demonstrated confidence in May 2024 by injecting a record $58 billion into equity ETFs. This was a historic capital inflow, particularly in an election year, a period typically characterized by market volatility. This large inflow of funds shows robust investor confidence and a firm stand against the ‘Sell in May’ strategy.

The fixed-income ETFs also saw an inflow of $27 billion in May, the highest in over a year. These figures contributed to the total ETF flows for the year-to-date, which is currently at +$315 billion. The data reflects the growing tendency of ETFs being actively used by investors who look for diversified yet easily tradable instruments.

Investor confidence remains strong despite market volatility, fueled by a growing preference for actively managed ETFs and an expanding market with a wider array of choices. Moreover, with 138 new ETFs launched in the first quarter of 2024, the market is expanding rapidly, providing investors with an array of choices.

In addition, the operational benefits of ETFs over mutual funds, vis-à-vis through lower fees and improved tax efficiency, draw in more investors. Moreover, advancements in trading systems make it easier for investors to trade and manage their ETFs.

The substantial inflows in both equity and fixed-income ETFs demonstrate a balanced approach among investors to keep their portfolio as diversified as possible even when interest rates fluctuate. The ETF inflows of May 2024 signal a strong vote of confidence from the investors who are slanting toward ETFs as their preferred investment.