US equities lead 2025 ETF flows: A closer look at global trends

Yahoo

23-07-2025

US equity exchange-traded funds (ETFs) have pulled in $191 billion so far this year, while international equity flows have reached $81 billion, according to AllianceBernstein.
Julie Gunts, AllianceBernstein global head of ETF strategy and partnerships, joins Market Catalysts to discuss where flows are heading next.
To watch more expert insights and analysis on the latest market action, check out more Market Catalysts here.
US equity ETFs have seen $191 billion in inflows this year, representing about 60% of total ETF inflows overall, and international equities have had $81 billion in inflows. That's close to the total for all of 2024. As investors weigh continued trade uncertainty, where will the flows go next? Will we see continued trends? Want to bring in Julie Goltz Alliance Bernstein, global head of ETF strategy and partnerships for this week's ETF report brought to you by Invesco QQQ. Julie, thank you so much for being here.
Thanks for having me.
So, I guess it's not a surprise that international has seen big flows. That's what we've seen been seeing and talking about. We look writ large. Where is some of that concentrated? And do you expect that to continue?
Yeah, I think if you look at, you know, the international flows, it's really driven by performance year to date. So, you know, US equities while a volatile first half of the year ended up, you know, 6% for the S&P 500. If you look at the breakdown of international, European equities, in US dollar terms, returned almost 25%. And so I think, you know, ETF flows are to some extent chasing those returns, but I think you know, also expected future returns. And so if you look at the returns in Europe, um, it's driven by industrials, so a lot of the defense companies as Europe is increasing their defense spending and also, you know, infrastructure. European fiscal spending is expected to continue, and their companies set up to benefit from that. We've also seen financials really lead with, you know, the ECB cutting rate, and you know, that benefiting banks and then utilities. Utilities are immune to tariffs, are immune to FX risk, and so have been performing well. On the flip side in Europe, the underperformers consumer discretionary, which is not surprising. Those are global companies impacted by US consumer and potential tariff risk.
And outside of International, where are you seeing kind of interesting demand trends?
Yeah, I mean, we're really seeing demand for emerging market ETFs as well, especially on the active side. So Alliance Bernstein is an active ETF issuer. There aren't that many true fundamental emerging market ETFs out there. Um, and so we're seeing demand for that asset class as, you know, fundamental investing really matters in emerging markets. Um, and so continue to see growth there as well.
That makes sense. Um, you guys only introduced your ETF business what, three years ago?
Yep.
Yeah, I mean it's just been amazing to watch the growth of the industry. How have you guys sort of managed to grab assets in market share? What do you feel like is your angle?
Sure. Yes, so we we launched our first ETFs in September of 2020 2022. So coming up on our three-year mark and have about $8 billion in AUM, and we're really seeing growth, you know, our ETFs are driven by our research, our investment capabilities. And so, you know, long-term investors, you know, looking for active investment strategies. And we've also seen, you know, areas of the market, our municipal bond brand is really strong, and so we have a suite of tax aware ETFs. We've also have, you know, a suite of buffered ETFs that have surpassed a billion dollars. And so taking, you know, unique solutions or different types of investment outcomes and packaging them in ETFs for our clients.
Whether it comes to you guys or the industry writ large, the, you know, pace of record flows that we just continue to see year after year after year, anything that's going to slow that down or is it just going to keep going?
I think it's going to continue to accelerate. Like, so far year to date, we've seen over $600 billion in ETF flows in in the US. Interestingly, active is almost 40% of that, yet still 10% of the AUM. Um, and you know, investors like the ETF vehicle. There's the transparency, the daily liquidity, the tax efficiency. And so as you know, more money is put to work, either from cash on the sidelines or mutual fund single stock investments, ETFs are a really easy option and efficient options for people to get exposure to the marketplace.
You know, I know you've also been you mentioned in the break you've been traveling internationally. What's the ETF industry and demand like outside of the US?
You know, this year we also have seen, you know, real growth in global ETFs. And so global regulators, I think, are, you know, getting on board with that. This is a vehicle, you know, of the future. This is a more modern option for investors. And, you know, for example, I was just in Taiwan. AB is about to launch the first fixed income active ETF in Taiwan. Active ETFs were just allowed from a regulatory perspective earlier this year. And so different pockets of Asia, we're seeing similar trends, um, and in Europe as well. You know, ETFs continue to grow, both in the passive and the active space.
Interesting, Julie. Thank you so much. Appreciate it.
Thank you.
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