Vertiv CEO Giordano Albertazzi discusses AI power companies on ‘The Claman Countdown.’
Despite the whiplash of President Donald Trump’s tariffs, trade uncertainty and day-to-day market swings, investors are pouring money into exchange-traded funds to capture fast-moving stock and bond action.
With $121 billion flowing into ETFs industrywide in July, the yearly tally hit $677 billion and is now on pace for a record $1.3 trillion for 2025, as tracked by State Street Research, the third-largest ETF firm, with over $1.2 trillion in assets.
U.S. vs. Foreign Stocks
While U.S. equity ETFs maintained their dominance, netting over $56.9 billion in July, foreign rivals are seeing a renaissance as investors seek more diversification. Non-U.S. equity ETFs saw $24 billion in new money.
TRUMP SLAPS INDIA WITH TARIFFS
European Union flags fly outside the European Commission headquarters in Brussels on March 1, 2023. (Reuters/Johanna Geron/File Photo / Reuters Photos)
“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 Research, State Street Investment Management, in a note titled “A rally made of steel?”.
| Ticker | Security | Last | 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% |
Still, State Street’s flagship ETFs which track the S&P 500, the SPDR S&P 500 ETF Trust or SPY and the SPDR Portfolio S&P 500 ETF or SPLG, saw $9.7 billion in inflows this year, even as the S&P continued to set multiple new record highs. This is three times the average monthly flow over the past year for the combo.
MICROSOFT JOINS EXCLUSIVE $4 TRILLION CLUB
The S&P 500 has gained nearly 8% this year through Monday.
Bonds Balloon
As for bonds, investors plowed $24 billion into fixed income across the curve. Of note, inflation-linked bonds recorded their seventh month in a row of inflows, the longest stretch since 2021, Bartolini noted. The sector inflows crossed over $200 billion for the year, the fastest ever seen in a year.
Despite headline inflation cooling, prices for items such as beef remain high, up 10% annually as of the latest consumer price index.
INFLATION TICKED HIGHER IN JUNE, CREATING HEADWINDS FOR FED
Shoppers search for meat and pork products inside a Walmart store, June 1, 2012 in Rosemead, California. (Bob Riha, Jr./Getty Images / Getty Images)
Small Cap Cracking?
Investors 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 companies have never been worse, Bartolini observes.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
“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.
