Last Week in ETFs: Emerging Markets Inflow Records, $144B Duration Gap, and Derivatives Demand

The Big Picture

The ETF industry total assets currently stand at $13.94 trillion, supported by a weekly inflow of $23.64 billion. This activity aligns with a trailing one-year flow of $1.54 trillion. Data for the latest week shows Commodities leading performance with a 5.32% total return and $1.48 billion in new assets, while Digital Assets recorded redemptions of $2.20 billion, a shift from the $32 billion in positive flows recorded over the last twelve months.

Source: ETF Action, FactSet

Equity Landscape

Equity ETFs now command $10.62 trillion in assets following a weekly expansion of $14.22 billion. Beneath the headline growth, a geographical divergence is evident: U.S. Size & Style channels recorded a $5.01 billion redemption, while Global Ex-U.S. strategies absorbed $9.42 billion. Thematic and Sector & Industry channels remained in favor, contributing $4.84 billion and $1.98 billion in weekly inflows respectively.

Source: ETF Action, FactSet

U.S.: Weekly data shows $5.01 billion in redemptions within the domestic Size & Style category. While Large Cap Value strategies recorded relative stability, broader Blend categories accounted for the majority of the liquidation. Small-Cap ETFs led the market performance with gains exceeding 7%, while mega-cap tech heavyweights recorded negative returns to start the period.

International: International strategies gathered $9.42 billion in weekly inflows, led by Emerging Markets and Global Ex-U.S. Large Cap. Headlines from the World Economic Forum in Davos centered on a geoeconomic fragmentation and a “ruptured” global trade order. Despite this backdrop, Vanguard and iShares international suites maintained positive flow momentum, with Emerging Markets reaching an all-time monthly record of $14.02 billion.

Region & Country: The Region & Country channel gathered $1.79 billion, primarily driven by Brazilian equities. The iShares MSCI Brazil ETF (EWZ) recorded a 12.78% year-to-date return as the Ibovespa reached record highs. This activity aligns with stabilizing local inflation data in Brazil, contrasting with the broader geoeconomic uncertainty discussed at Davos.

Sectors & Themes: Sector activity was characterized by the impact of severe winter storms across the U.S. East Coast, which contributed to a 70% spike in natural gas prices. Materials and Energy channels led the group, with XLB and XLE gaining 0.91% and 0.57% respectively. Thematic ETFs saw $4.84 billion in interest, with Silver Miners (SLVR) gaining 16.71% as natural resources outpaced growth-oriented fintech themes.

Fixed Income Landscape

Fixed Income ETFs reached $2.33 trillion in total AUM following weekly inflows of $9.17 billion. Taxable bond strategies provided the majority of the growth, accounting for $8.47 billion of the total, while Municipal and Specialty categories gathered a combined $699 million.

Source: ETF Action, FactSet

Duration: Yield volatility remains elevated as market participants parse mixed economic prints. Flow data highlights a concentration in the front end: Ultra-short and Short duration bond ETFs have gathered $155B in the past year, while Long-duration ETFs have recorded only $11B in inflows during the same period.

Credit: Taxable segment activity was concentrated in Treasuries, which served as the primary liquidity vehicle during the week. Municipal bond ETFs reached a $192 billion AUM milestone following $220 million in weekly inflows, representing a slower growth rate compared to the taxable bond channel.

International: Performance data shows a divergence between local currency and USD-denominated international bonds, with the latter benefiting from sustained dollar strength. This currency effect is reflected in the flow data for Global Ex-U.S. taxable bond suites relative to domestic offerings.

Currencies, Commodities & Digital Assets

The combined Currencies, Commodities, and Digital Assets landscape now accounts for approximately $528.6 billion in total AUM. While the aggregate group saw a weekly net outflow of $719.6 million, results were sharply divided: Commodities gathered $1.48 billion in new capital, while Digital Assets faced a stark redemption of $2.20 billion.

Source: ETF Action, FactSet

Commodities: The “gold rush” remained in full effect last week as Precious Metals ETFs captured $1.5 billion in new capital. This channel leads the broader commodity group, which gathered $1.48 billion in weekly flows, a significant acceleration relative to its $13.5 billion three-month total. Gold and silver dominated the performance narrative as participants look to tangible assets amidst domestic energy volatility.

Digital Assets: Bitcoin and Ethereum recorded significant redemptions of $2.20 billion, a sharp departure from the $32 billion gained over the trailing year. Both core assets stumbled amid broad selling pressure, marking the beginning of what appears to be a sustained cooling in sentiment for the top-tier digital ecosystem despite ongoing institutional adoption narratives.

Currency: The Swiss Franc served as the week’s primary magnet for capital within the currency channel. While the overall segment remains a small subset of the macro landscape at $2.3 billion in AUM, the $3.2 million in weekly inflows highlights a preference for safe-haven currencies following the geopolitical and geoeconomic friction discussed at Davos.

Non-Traditional Landscape

Non-Traditional ETF assets have surpassed $414 billion following a weekly inflow of $823 million. This growth is concentrated in derivative-based strategies across synthetic income, buffers, and levered tactical vehicles.

Source: ETF Action, FactSet

Synthetic Income: The channel has reached $174 billion in AUM. Weekly data shows NEOS outpacing JPMorgan in flows. Activity remains concentrated in equity-linked covered call strategies.

Buffers: The Buffer ETF channel stands at $82.4 billion in AUM. FT Vest and Innovator lead the category in both assets and new innovation launches as the number of defined-outcome offerings continues to scale.

Leverage, Inverse & Gambling (Single Stock): The $158 billion Leverage & Inverse channel recorded extreme return dispersion, led by a 72% weekly gain in BOIL. The Single Stock segment—which functions as a gambling vehicle for high-conviction directional bets—saw a $600 million rotation during the week. Big winners and losers were starkly divided, with high-beta tech-linked products recording double-digit performance swings within single trading sessions.

Multi-Asset & Alternatives

The Multi-Asset and Alternatives landscape currently represents $42.6 billion in total AUM. Weekly activity recorded a modest expansion of $144.4 million, maintaining a trailing one-year growth trend of over $11.7 billion as investors look to diversified and absolute return strategies.

Source: ETF Action, FactSet

Multi-Asset: Within the Multi-Asset space, the weekly expansion of $162 million was led by categories with exposure to real assets and global macro themes. Diversified portfolios that incorporate tangible infrastructure and inflationary hedges recorded stronger flow profiles relative to traditional 60/40 blend strategies.

Alternatives: Absolute Return strategies recorded mixed results, with total group redemptions of $17.6 million. However, internal data highlights a performance and flow surge within Managed Futures, which outpaced volatility-based hedges. This trend reflects the ongoing growth of futures-linked strategies as a component of the liquid alternative landscape.