The Morningstar Global Markets Index, a broad gauge of worldwide equities, tumbled 11% from April 3, 2025, through April 8, 2025, as markets digested sweeping tariffs announced in early April. Safety was hard to find. Treasuries, gold, bitcoin, and most liquid alternatives also lost value, albeit by varying amounts.
Exchange-traded fund investors kept on buying, piling roughly $18 billion into US ETFs from April 3 through April 7. That headline figure seems encouraging, but examining it more closely reveals that investors were choosier than normal. Fifty-nine Morningstar Categories endured outflows over that span; just 40 gathered inflows. Many investors traded out riskier ETFs for safe havens as markets spiraled, but others proved that the buy-the-dip spirit is alive and well.
Stock ETF Flows Leaders
S&P 500 Trackers
Investors piled into S&P 500 ETFs, specifically Silver-rated SPDR S&P 500 ETF SPY and Gold-rated Vanguard S&P 500 ETF VOO, and not much else when markets soured from April 3 through April 7 (all flow figures refer to this period unless otherwise specified). These two ETFs accounted for over $19 billion of inflows, while $5 billion departed from the remaining equity ETFs in total.
Vanguard S&P 500 ETF remains a flows juggernaut after recently overtaking SPDR S&P 500 ETF as the world’s largest ETF. Since the start of 2024, the Vanguard ETF brought in over $150 billion in new investment. It has been absurdly consistent in its appeal to investors, having not had a monthly outflow since 2022.
Value and Dividend ETFs
Investors favored value over growth stocks amid the tariff-induced market decline. Cheaper valuations may be less susceptible to economic risks and generally overweight defensive sectors like consumer defensive, healthcare, and utilities—the three best-performing sectors during this period.
Dividend ETFs, which often belong to value categories, brought in $800 million for similar reasons to value stocks. Investors prefer lower valuations and nearer-term cash flows typical of dividend stocks during volatile markets. Gold-rated Schwab US Dividend Equity ETF SCHD—which holds a stable of profitable, dividend-paying stocks—led large-value and dividend ETFs with $500 million of inflows.
Stock ETF Flows Laggards
Sector-Equity Funds
Reeling markets stung the sector-equity cohort. It bled nearly $7 billion as 12 of its 16 Morningstar Categories endured outflows. Flows to and from this group tend to rise and fall alongside the market.
Both cyclical and defensive sectors faced outflows. Relatively volatile financial and energy ETFs shed north of $1 billion apiece. ETFs tracking the more defensive healthcare, consumer staples, and utilities sectors also posted outflows despite holding up better than the market. Investors were eager to unload sector ETFs of all stripes.
China Region
Investors pulled about $735 million from ETFs in the China region Morningstar Category. That’s not a shock: The category saw outflows in four of the past five months after notching record inflows in September 2024.
Linking the China region category outflows to tariffs requires little imagination. The Donald Trump administration imposed fresh tariffs on Chinese goods in March, then on April 2 layered on more, prompting China to enact retaliatory tariffs in return. US-based ETF investors may have wanted to clear their China exposure in a brewing trade war. KraneShares CSI China Internet ETF KWEB bled about $300 million, a U-turn after it raked in $1.5 billion in the first quarter of 2025.
Bond ETF Flows Leaders
Low Credit Risk
The flight to safety was more pronounced in fixed income than stocks. ETF investors preferred low credit-risk categories like ultrashort bond, government, and Treasury Inflation-Protected Securities, while seeking shelter from the stock selloff. Likewise, ETF investors fled the highest credit-risk categories: high-yield bonds and bank loans.
The three largest ETF issuers loomed large in fixed-income ETFs. The top seven ETFs by inflows belonged to State Street, iShares, and Vanguard.
Ultrashort Bonds
The ultrashort bond category gathered nearly $2 billion, third-most among all Morningstar Categories and tops among bonds. Not all ultrashort funds thrived, though. This category has distinct pockets that investors treated differently when markets started to sink.
Most of the ultrashort-bond category comprises cash substitutes whose safety attracted investors in droves. They poured $3.5 billion into SPDR Bloomberg 1-3 Month T-Bill ETF BIL, third-most among all ETFs in that span, and another $1.1 billion into iShares 0-3 Month Treasury Bond ETF SGOV. Those ETFs have effectively preserved capital, generating returns just above zero from April 3 through April 7.
Collateralized loan obligation ETFs represent a lean but fast-growing share of the ultrashort bond category, led by the $21-billion Janus Henderson AAA CLO ETF JAAA, which tripled in size over the past 12 months. Investors’ enthusiasm for them waned recently, though, as the Janus Henderson ETF bled more than $1 billion. Long-term demand for CLO ETFs could be alive and well, but they take more risk than their cashlike category peers, hurting their popularity of late.
Government Bonds
ETF investors flocked to nearly all flavors of Treasury bond and TIPS ETFs during the market turmoil. Five government-bond and TIPS categories brought in a combined $4.2 billion. Treasury bonds tend to offer the best hedge for stocks among traditional bond sectors, while TIPS benefit from nearly no credit risk and a hedge against rising prices. Credit spreads were historically tight coming into 2025, so it’s no surprise to see investors rotating out of credit-riskier bond ETFs.
ETF investors aren’t solely focused on cash—some were willing to take on some interest-rate risk as well. Investors picked their spot on the yield curve when adding $2.6 billion to Bronze-rated iShares 7-10 Year Treasury Bond ETF IEF, while also directing $1.6 billion to the shorter duration Silver-rated SPDR Portfolio Intermediate Term Treasury ETF SPTI.
Credit risk is out, but investors appear undecided on duration risk.
Bond ETF Flows Laggards
High Credit Risk
ETFs built around credit risk got the cold shoulder. The high-yield bond, bank-loan, and corporate-bond categories, all of which are more closely correlated with stocks than Treasury bonds, bled a combined $6.7 billion.
The high-yield bond category fared the worst. About $3.6 billion exited the space, including nearly $900 million from SPDR Bloomberg High Yield Bond ETF JNK alone. That ETF declined 4.2% from April 3 through April 7, about 3.7 percentage points further than iShares US Treasury Bond ETF GOVT. Investors may have taken that return gap as their cue to make a change.
Bank-loan ETFs faced record outflows in March and have continued their woes in April, bleeding $2.3 billion from April 3 through April 7. Invesco Senior Loan ETF BKLN posted a negative 2.9% return over that stretch and, perhaps consequently, saw more than $1 billion leave. The corporate bond category held its outflows below $1 billion, but that’s cold comfort for iShares iBoxx $ Investment Grade Corporate Bond ETF LQD. The $30-billion fund slid roughly 3.3% and bled more than $800 million.
Other ETFs
Buy the Dip
Short-term traders were active in leveraged and inverse ETFs during the period. Overwhelmingly, they positioned for a rebound in tech stocks and easing volatility. ProShares UltraPro QQQ TQQQ took in $3 billion, and Direxion Daily Semiconductor Bull 3X ETF SOXL added $2.2 billion as the main beneficiaries, despite brutal performance by these ETFs to start the year. Those inflows explained most of the $5.8 billion that flowed into trading tool ETFs.
Trends aside, investors would be wise to steer clear of these ETFs.
Gold
Gold ETFs came to a screeching halt after rolling through quarter one. After SPDR Gold Shares GLD soared 19.2% and collected nearly $6 billion last quarter, it pulled back 4.5% and surrendered $1 billion from April 3 through April 7. That is somewhat surprising because investors herald gold as a reliable safe haven. It lived up to that billing in March. Gold’s recent triumphs may have worked against it here, as investors felt comfortable taking profit and redeploying it into beaten-down stock portfolios.
Source: ETF Flows: Where Investors Put Their Money Amid Market Volatility
