ETF flows buck volatility

Coming off the all-time yearly record, US-based ETF flows slowed during tariff-induced Q1 market volatility. Yet they still managed to gather hundreds of billions in assets to join a strong current of flows.

Here were the biggest trends in ETF flows to start the year.

Stock flows lead despite volatility, fixed income surged

It was going to be a tall ask to match the gargantuan equity (e.g., stock) ETF flows from the last quarter of last year. And the market backdrop was not particularly conducive, with the S&P 500 falling from all-time highs by mid-February through quarter-end.

After accumulating a quarterly record of $312 billion equity ETF flows in Q4, they slowed sequentially to just over half that amount in Q1 2025. Despite the quarter-over-quarter slowdown, that’s still a relatively robust haul that topped flows for the same category in Q1 2024. It’s even more remarkable to have happened amid huge stock market price swings.

While equity ETF flows slowed from the prior quarter, fixed income (e.g., bond) ETF flows ramped up. The over $100 billion in fixed income ETF flows during Q1 roughly matched the best quarter from last year (Q3), and easily outpaced both Q4 2024 as well as Q1 2024. The Q1 fixed income cume builds on momentum from last year, when this category accumulated $301 billion in flows during 2024. With that said, equity ETF flows have now outpaced fixed income ETF flows for 8 consecutive quarters.

Tech, financial ETF flows beat back market vol

Somewhat surprisingly, the 2 sectors that attracted the most sector-based ETF flows in Q1 were technology and financials (both sectors underperformed the broad market during the quarter with market volatility having hit cyclical sectors harder than defensive sectors). Momentum may have played a role, as tech and financials attracted the most net flows during Q4 2024.

Meanwhile, commodity-linked sectors saw steep outflows, even though many key commodity prices didn’t start experiencing steeper price declines until early Q2. Oil prices, for example, fell marginally from $73 per barrel at the start of the year to $71 by the end of Q1 (it's worth noting that they have since fallen further). At the same time, gold prices surged during Q1. Those sector outflows may have reflected future economic concerns and the impact that recession risks could have on the demand for raw materials.

Active ETFs sustained momentum

The emergence of active ETFs was one of the trends that solidified throughout 2024. Actively managed ETFs, which in contrast to passively managed ETFs are not designed to track a benchmark, accounted for $299 billion of ETF industry inflows in 2024. Of the 723 ETFs that were launched in 2024 (a new annual record), 575 were actively managed ETFs.

The multiyear trend of active ETF asset growth continued in Q1, with this group gathering $116 billion in flows. Moreover, the quarterly gap between actively managed ETF flows and passively managed ETF flows notably narrowed.

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.