Key ETFs & Industry Trends to Watch in 2024

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On the first episode of ETF Prime in 2024, host Nate Geraci speaks with a trio of individuals on several ETF-industry-related topics. His guests include VettaFi’s Lara Crigger, who shares her ETF predictions for 2024, and more. To close the podcast, Geraci speaks with Strategas’ Todd Sohn and CFRA’s Aniket Ullal to discuss key ETFs and trends that they’re watching closely this year.

ETF Predictions for 2024

To begin this week’s podcast, Nate Geraci brings on VettaFi’s Editor-in-Chief, Lara Crigger, to discuss some of her predictions for the ETF industry in the new year. Her first expectation is that Vanguard will overtake BlackRock as the No. 1 ETF issuer in total AUM. Geraci highlighted that Vanguard is currently sitting behind BlackRock by close to $235 billion in assets, and ponders why Crigger believes the firm can close such a significant gap in just a year.

“It’s a pretty big gap, but it is actually a prediction that I am fairly confident about,” she said.

Crigger points out that in the grand scheme of things, this amount of money in terms of accumulation of assets is not that large of a gap for Vanguard to close. She believes the reason that Vanguard has gained so much traction on BlackRock in recent years, and will continue to do so in 2024, is because of its favorable expense ratios and its impressive lineup of products that she feels investors truly want. Crigger also mentions that Vanguard’s shareholders are bought into the company fully and likens them to a fanbase. She feels that this fandom is hard for other firms to compete with, and names it as a contributing factor as to why she believes this prediction will come to fruition.

The Release of Spot Bitcoin ETFs

The conversation then shifts to Crigger’s second prediction for 2024, which is that spot bitcoin ETFs will launch but will fail to gain a significant amount of inflows within the first month of their initial release. Geraci is quick to call attention to the fact that he is on the opposite side of Crigger when it comes to how these products will perform when they do eventually come to market. Crigger explains that she is extremely bearish regarding these products because she feels many individuals who have been paying attention to the bitcoin ETF saga are people within the ETF industry, not necessarily the investors these funds will need once they do come to market.

“I am pretty sure the bloom is off the rose on crypto,” she added.

Crigger mentions that the “shiny object chasers” and retail investors are looking to put their money into other market areas. She specifically mentions artificial intelligence and other types of technology as areas of the market that investors are paying more attention to. Ultimately, Crigger believes it will be tough for issuers to bring in funds because of the lack of overall interest in cryptocurrency.

Furthermore, she shares that she thinks there will be more ETF releases in 2024 than there were in 2023, which was a year where more ETFs launched than the industry has ever seen before. The duo then finish their conversation by diving into several more of Crigger’s ETF predictions for 2024.

The Unbundling of Emerging Markets

To close this week’s podcast, Geraci brings on Strategas’ Todd Sohn and CFRA’s Aniket Ullal to have a roundtable-style discussion on what both individuals are predicting for 2024. Geraci first shares one of Ullal’s ETF predictions for 2024, which is that investors will begin to unbundle their emerging market allocations in 2024.

“We think investors may relook at how they get their emerging markets exposure, and they may unbundle,” Ullal said.

He shares that investors will most likely begin to look away from more broad emerging market ETFs because of these types of funds’ heavy focus on China. Ullal feels that the several different concerns surrounding China, and the country’s underperformance in 2023, will lead them to do so. He thinks investors may begin to look to more country-specific ETFs to hedge against the possibility of China underperforming again. He also points to a fund like the KraneShares Dynamic Emerging Markets Strategy ETF (KEM) as another possible strategy investors may to look to. Geraci then turns to Sohn to ask him what his expectations are for emerging markets in 2024.

“The flaws are still there for EM, especially when China remains the dominant region,” Sohn shared.

Sohn mentioned that China’s underperformance is something that has hurt emerging market funds in the past, and that he agrees with Ullal that investors could begin to unbundle their emerging market strategies. Overall, he thinks that taking a more active approach to this space is another possible successful strategy investors may take this year.

In addition, the trio discusses several other key trends and funds they expect to see in the new year, including the rise of active bond ETFs and more.