ETFs on record pace
A strong Q2 has ETFs on track to attract over $1 trillion in annual flows again.
- ETF flows continued to slow quarter over quarter but remain on track to potentially attract more than $1 trillion in annual flows.
- Tech sector-based ETF flows led.
- Momentum behind active ETF flows stalled.
Despite a slower Q2, US-based ETF fund flows remain on track to surpass $1 trillion in annual flows once again. Here are some of the key trends that drove ETF flows over the last 3 months that can help investors find where the momentum may be in the market.
Flows slow but still eye record pace
ETF flows declined for the second consecutive quarter, following the steeper drop in Q1 from the massive Q4 2024 tally. While Q2 flows were lower than the previous quarter, they were slightly above the same period last year—which was also the case for Q1 2025. That’s put ETFs on track to once again surmount $1 trillion in annual flows—assuming they pick up during the second half as has been the case in previous years.
Source: Fidelity Investments, as of July 10, 2025.
Even with a mostly positive market backdrop, equity ETF flows dipped slightly from Q1. The market backdrop was different during Q2 compared with Q1, when tariff-induced volatility led to big price swings. Despite the calmer environment, equity (e.g., stock) ETF flows were marginally lower quarter over quarter.
Fixed income (e.g., bond) ETF flows also dipped, although the Q2 drop may reflect how relatively robust Q1 flows were to a greater extent. Regardless, equity ETF flows have now outpaced fixed income ETF flows for 9 consecutive quarters.
Tech ETF flows blow the field away
Once again, tech ETF flows led the way among sector-based ETFs. The tech stock resurgence the past 3 months might have been foreshadowed in Q1—when tech ETFs led sector flows (despite underperforming the broad market amid market volatility. In fact, tech ETFs accumulated twice as much during that period as the next best-performing sector in Q1, the financial sector.
Source: Fidelity Investments, as of July 10, 2025.
Tech stocks bounced back in Q2 and the outsized quarterly flows for tech sector-based ETFs reflects strong investor demand for exposure to this sector. Another trend that continued from Q1 was commodity-linked sector ETFs seeing steep outflows. They were joined by financials and health care as the lone sector-based ETFs to experience outflows during Q2.
Active ETFs lose some ground
The active-passive quarterly gap had narrowed substantially in Q1 as actively managed ETFs, which in contrast to passively managed ETFs are not designed to track a benchmark, had steadily picked up steam over the course of several years. But actively managed ETFs lost some momentum in Q2, while passively managed ETF flows held steady. With that said, actively managed ETFs are on pace for their best flows year ever.
Source: Fidelity Investments, as of May 11, 2025.
Thus far in Q2, this trend appears to have gained steam. And many ETF industry watchers expect that 2025 could be another record setter for active ETF flows and new issuances.
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Exchange-traded products (ETPs) are subject to market volatility and the risks of their underlying securities, which may include the risks associated with investing in smaller companies, foreign securities, commodities, and fixed income investments. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. ETPs that target a small universe of securities, such as a specific region or market sector, are generally subject to greater market volatility, as well as to the specific risks associated with that sector, region, or other focus. ETPs that use derivatives, leverage, or complex investment strategies are subject to additional risks. The return of an index ETP is usually different from that of the index it tracks because of fees, expenses, and tracking error. An ETP may trade at a premium or discount to its net asset value (NAV) (or indicative value in the case of exchange-traded notes). The degree of liquidity can vary significantly from one ETP to another and losses may be magnified if no liquid market exists for the ETP's shares when attempting to sell them. Each ETP has a unique risk profile, detailed in its prospectus, offering circular, or similar material, which should be considered carefully when making investment decisions.
ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses.
All the data presented within are from Fidelity Investments and Bloomberg, as of May 14, 2025. These data do not reflect mutual fund data, and investors who would like to monitor the entire fund flow universe may want to consider flows going into or out of mutual funds.
Fidelity Investments® provides investment products through Fidelity Distributors Company LLC; clearing, custody, or other brokerage services through National Financial Services LLC or Fidelity Brokerage Services LLC; and institutional advisory services through Fidelity Institutional Wealth Adviser LLC.