The Big Picture
Investors kicked off the new year with a decisive pivot toward stability and income, actively rotating away from speculative edges. While U.S. Equity Size & Style strategies absorbed a massive $31 billion—likely driven by calendar-turn allocations—capital fled “risk-on” segments like Cryptocurrency, Leverage & Inverse, and Single Stock ETFs. Conversely, the appetite for yield was insatiable: Taxable Fixed Income ($7.2B), Synthetic Income ($1.1B), and Municipal Bonds ($994M) all posted robust inflows. Performance was equally bifurcated, with Energy and Altcoins surging while precious metals and volatility-sensitive tech names faced steep corrections.
Equity
Size & Style (US)
Despite facing market headwinds that pushed all major size and style categories into negative territory, the channel attracted a staggering $31.34 billion in weekly net inflows. U.S. Large Cap Value proved the most resilient, declining just -0.30%, while U.S. Small Cap Growth lagged significantly with a -1.65% drop. Vanguard and iShares continued to dominate the landscape, collectively managing over 60% of the channel’s assets.
Size & Style (Global)
Global equities saw mixed performance, with Value strategies taking the lead as Global Large Cap Value posted a positive 0.22% return. The channel gathered $522 million in net inflows, driven primarily by the Global Large Cap Blend category which absorbed $466 million. The Vanguard Total World Stock ETF (VT) was the standout gatherer of assets, pulling in $288 million for the week.
Size & Style (Global Ex-US)
Emerging Markets were the clear standout, with the Emerging Large Cap category surging 1.90% to lead all segments. Investors chased this momentum, pouring $2.72 billion into the channel, with Global Ex-U.S. Large Cap Blend funds capturing the lion’s share at $1.66 billion. The Vanguard FTSE Developed Markets ETF (VEA) led individual inflows, while Emerging Market funds like EMEQ posted impressive returns of over 5%.
Region & Country
The Asia-Pacific region led performance with a 1.07% gain, highlighted by a massive surge in South Korean defense stocks. Flows were positive at $482 million, with Eurozone strategies attracting the most capital ($198 million). While South Korean funds like KDEF rallied over 6%, Mexican equities struggled, with the iShares MSCI Mexico ETF (EWW) dropping more than 2%.
Sector & Industry
Energy was the top-performing sector, climbing 3.14%, while Consumer Discretionary lagged with a -2.15% decline. Despite the performance in Energy, the broader channel faced $1.09 billion in net outflows, heavily weighed down by redemptions in Health Care and Financials. Semiconductor funds bucked the trend, with SMH gathering $328 million even as broader tech funds like XLK faced outflows.
Thematic
Resource-oriented themes took center stage, with Natural Resources funds attracting $464 million in net inflows. Midstream & MLPs led performance with a 1.49% gain, while Precious Metals strategies faced a sharp 5.12% correction. Global X was the dominant issuer, gathering over $900 million in weekly flows, largely driven by interest in copper and uranium miners.
Specialty
Specialty equity strategies saw healthy inflows of $151 million, primarily driven by Hedged Equity products which captured $137 million. Performance was muted, with Long/Short strategies dipping slightly by -0.33% but outperforming Hedged strategies. Little Harbor Advisors’ MSTQ ETF was a flow standout, gathering $119 million in fresh assets.
Fixed Income
Taxable
The channel enjoyed a massive $7.22 billion inflow week, led by Investment Grade credit ($6.23B) and Intermediate duration ($4.77B) funds. Convertible strategies were the top performer, gaining 0.41%, while Long Government bonds struggled, falling -0.71% as rates shifted. Short-duration instruments like SGOV continued to act as cash magnets, pulling in over $1.1 billion.
Municipal
Municipal ETFs started the year strong with $994 million in net new money, with the Intermediate category capturing the majority ($558 million). High Yield munis led performance with a modest 0.32% gain, outpacing other segments. iShares cemented its leadership in the space, gathering nearly $250 million in weekly flows.
Specialty
Defined Maturity funds were the primary driver of the channel’s $584 million in inflows, attracting $617 million. Interest Rate Volatility strategies were the top performers, gaining 0.16%, with the Simplify Interest Rate Hedge ETF (PFIX) rising 1.17%. Conversely, Maturing Ladder strategies lagged, posting a -0.20% return for the week.
Commodities
Commodities
Commodities faced a tough week with $710 million in net outflows, driven almost entirely by a $748 million exit from Precious Metals funds. Carbon Credits were the lone bright spot in performance, gaining 0.98%, while Shipping Freight strategies plummeted over 7%. Major gold ETFs like GLD saw significant redemptions, contrasting with inflows into Multi-Sector Broad Market funds.
Currencies & Crypto
Currency
Currency flows were muted with just $7 million in net outflows. Short Yen strategies led performance with a 0.64% gain, while the Long CAD category lagged. Invesco’s UUP was the only fund to see meaningful inflows, as investors slightly favored the US Dollar over the Euro and Australian Dollar.
Cryptocurrency
Altcoins stole the show, delivering an 8.18% return and capturing $107 million in inflows, while Bitcoin strategies lagged with 2.01% returns and $253 million in outflows. Dogecoin-related funds like BWOW surged over 14%, highlighting a risk-on appetite within the crypto sector despite the broader channel’s net negative flows.
Alternatives
Alternatives
Investors rotated into Managed Futures, which attracted $90 million in inflows, while simultaneously pulling capital from Volatility strategies. Short Volatility funds led performance with a 0.92% gain, while Long Volatility funds dropped nearly 3%. The IMGP DBi Managed Futures Strategy ETF (DBMF) was a standout, gathering $86 million in a single week.
Non-Traditional
Leverage & Inverse
The channel faced a defensive shift with $1.37 billion in net outflows, led by a massive $1.28 billion exit from Leveraged Equity funds. Energy and Crypto leverage provided the best returns, with 21Shares’ 2x Long Sui ETF surging nearly 30%. Conversely, leveraged precious metals funds suffered steep double-digit declines.
Buffer
Buffer ETFs continued their steady growth with $222 million in weekly inflows, driven largely by equity-focused strategies. FT Vest dominated the issuer landscape, capturing $169 million of the total flows. Performance was led by Asia-Pacific Emerging market buffers, which gained over 3% for the week.
Single Stock
High dispersion defined the week as funds tracking Baidu (BIDU) skyrocketed over 40% on the back of the underlying stock’s surge, while AppLovin and Tesla-linked funds faced sharp declines. Despite the headline excitement, the channel saw net outflows of $247 million, with investors taking profits in “Magnificent 7” related products like NVDL and TSLL.
Synthetic Income
Synthetic Income assets swelled to $167 billion, bolstered by robust weekly inflows of $1.11 billion. The JPMorgan NASDAQ Equity Premium Income ETF (JEPQ) was the primary beneficiary, attracting $522 million. Performance was led by crypto-linked income strategies, with Defiance’s ETHI ETF jumping over 9%, while silver and gold income funds lagged.
Multi-Asset
Multi-Asset
Conservative allocation strategies outperformed in a tricky week, declining just -0.27% compared to larger drops in Global Macro. The channel saw broad-based inflows of $239 million, with Target Risk Growth funds leading the way. iShares remained the dominant issuer, gathering $90 million in fresh capital across its core allocation suite.
Disclosures
This material is for informational purposes only and should not be considered investment advice. All investments, including ETFs, involve risk, including the possible loss of principal. Investors should consider their investment objectives, risks, charges, and expenses carefully before investing.
This analysis was developed by the team at ETF Action. We leverage advanced AI tools to assist in the drafting and refinement of our content, based on our expert prompts, direction, and final review.
