Exchange-traded funds saw $62 billion in inflows during April, the lowest total since April 2024, according to State Street’s monthly U.S.-listed ETF flash flow report.
“Inflows were also below recent averages, putting our $1.3 trillion full-year forecast in jeopardy,” the report stated.
April was a volatile month for stocks, although the month’s drawdown was mostly regained when indexes recovered near the month’s end. During the month, investors increasingly bought defensive ETFs.
Gold ETFs had $3.8 billion in inflows, the 10th-highest month on record, while equities saw $32 billion in inflows, of which 82% went into U.S. ETFs.
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Ultra-short and short-term government bond ETFs saw $19 billion in inflows, their second-highest since March 2020, which State Street attributed to uncertainty around policy.
“Inflows into ultra-short and short-term-government bond ETFs are likely to continue as defensive, anti-uncertainty positioning, rather than have expectations for rate cuts triggering moves out of cash-like investments in anticipation of lower yields,” State Street’s analysts wrote.
Small-cap equity ETFs saw $6 billion in outflows, their worst recorded month. Over the past three months, these ETFs have had $10 billion in outflows, nearly canceling out $10 billion in post-election inflows.
Credit instrument ETFs, including those investing in corporate and high-yield bonds, bank loan and CLOs, saw a total of $15 billion in outflows during April, making the month the worst ever for bank loan and CLO ETFs.
Investors also added $4.3 billion in inflation-linked ETFs during the month, a significant spike not seen since the height of the COVID-19 pandemic. According to State Street, investors increased their allocations to inflation-sensitive market segments at the highest level since 1981 as a result of market uncertainty.
“Unbalanced across assets, geographies, or economic regimes, these portfolios were built for a world with greater global cooperation, a less constrained Fed, heavy foreign capital flow into the US, and US equity dominance in terms of returns, profits, and productivity,” the State Street report stated. “Those trends are unlikely to persist in this new reality.”
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Tags: ETFs, State Street
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