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Regardless of the whiplash of President Donald Trump’s tariffs, commerce uncertainty and day-to-day market swings, buyers are pouring cash into exchange-traded funds to seize fast-moving inventory and bond motion.
With $121 billion flowing into ETFs industrywide in July, the yearly tally hit $677 billion and is now on tempo for a file $1.3 trillion for 2025, as tracked by State Avenue Analysis, the third-largest ETF agency, with over $1.2 trillion in belongings.
U.S. vs. Overseas Shares
Whereas U.S. fairness ETFs maintained their dominance, netting over $56.9 billion in July, international rivals are seeing a renaissance as buyers search extra diversification. Non-U.S. fairness ETFs noticed $24 billion in new cash.
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European Union flags fly exterior the European Fee headquarters in Brussels on March 1, 2023. (Reuters/Johanna Geron/File Photograph / Reuters Photographs)
“This reflects a preference for greater geographical diversification amid the redrawing of our global macroeconomic paradigm that has the potential to upend the prior era of global cooperation that uniquely benefited US assets” wrote Matthew Bartolini, head of Americas ETF Analysis, State Avenue Funding Administration, in a word titled “A rally made of steel?”.
Ticker Safety Final Change Change % SPY SPDR S&P 500 ETF TRUST – USD DIS 631.17 +9.45
+1.52%
SPLG SPDR® PORTFOLIO S&P 500® ETF – USD DIS 74.25 +1.10
+1.50%
Nonetheless, State Avenue’s flagship ETFs which observe the S&P 500, the SPDR S&P 500 ETF Belief or SPY and the SPDR Portfolio S&P 500 ETF or SPLG, noticed $9.7 billion in inflows this 12 months, even because the S&P continued to set a number of new file highs. That is thrice the typical month-to-month circulate over the previous 12 months for the combo.
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The S&P 500 has gained almost 8% this 12 months via Monday.
Bonds Balloon
As for bonds, buyers plowed $24 billion into mounted revenue throughout the curve. Of word, inflation-linked bonds recorded their seventh month in a row of inflows, the longest stretch since 2021, Bartolini famous. The sector inflows crossed over $200 billion for the 12 months, the quickest ever seen in a 12 months.
Regardless of headline inflation cooling, costs for objects equivalent to beef stay excessive, up 10% yearly as of the newest client worth index.
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Consumers seek for meat and pork merchandise inside a Walmart retailer, June 1, 2012 in Rosemead, California. (Bob Riha, Jr./Getty Photographs / Getty Photographs)
Small Cap Cracking?
Traders yanked $6 billion from U.S. small caps, their seventh month in a row of outflows. Three-to-six-month flows for these domestic-based firms have by no means been worse, Bartolini observes.
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“Given the elevated rate regime, uncertain macro backdrop with tariffs likely ending up as growth negative and inflation positive, as well as weak profitability trends (34% of small caps are unprofitable), the small-cap headwinds may continue—with investors looking elsewhere to place their tactical capital,” he wrote.
