Interest in non-U.S.-equity exchange-traded funds is growing and investors are also rotating out of small-cap equities. Exchange-traded funds attracted $121 billion in investor inflows in July, according to a July 31 report from State Street Investment Management. For the year to date, inflows totaled $677 billion, a figure estimated to grow to $1.3 trillion by the end of the year. In July, equity ETFs saw $81.5 billion in inflows. While U.S. assets reign supreme, investors are looking elsewhere for opportunities: In July, non-U.S.-equity ETFs attracted $24 billion in inflows. \"While U.S. equity flows are larger than non-U.S. equity, the recent trend has been to look overseas more than in prior periods,\" wrote Matthew Bartolini, State Street Investment Management’s head of ETF research in the report. \"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 U.S. assets.\" In 2024, U.S. equity ETFs accounted for 86% of all equity flows. Non-U.S. equity ETFs now account for 30% of equity flows, while accounting for 19% of all assets. Equity ETF investors are also rotating out of small-cap equities. In July, these ETFs saw $6.6 billion in outflows during the month, the seventh consecutive month of outflows, pushing total year-to-date outflows to $20 billion. Fixed-income ETFs saw $24 billion in inflows during the month, pushing the year-to-date figure to more than $200 billion, the fastest pace for this category. \"It took until September for flows to hit that barrier before ultimately ending the year with a record $300 billion [in 2024],\" State Street’s report stated. \"Given it’s only July, bond ETFs have clearly improved their pace. And based on our modeling of flows, their 2025 end-of-year figures could end up being over $380 [billion]—a massive new record.\" In July, gold ETFs took in $2 billion in inflows, bringing overall inflows to $21 billion year to date. In a sign of a tactical shift to non-U.S. exposures, emerging market ETFs took in more money in the first six months of the year than they did in all of 2024. These ETFs have seen six consecutive months of inflows, totaling $16 billion.

ETFs May Grow to $1.3T by Year-End

Investor interest in non-U.S.-equity exchange-traded funds is rising, with global diversification becoming a key trend. In July, non-U.S.-equity ETFs attracted $24 billion in inflows, accounting for 30% of equity flows and 19% of total assets. U.S. equity ETFs still dominate with 86% of equity flows, but there is a noticeable shift toward overseas exposure. Small-cap equities are seeing sustained outflows, with $6.6 billion in outflows in July, marking the seventh consecutive month of outflows. Fixed-income ETFs saw $24 billion in inflows in July, pushing year-to-date totals to over $200 billion, with projections suggesting they could reach $380 billion by year-end. Gold ETFs received $2 billion in inflows in July, contributing to a year-to-date total of $21 billion. Emerging market ETFs saw stronger performance in the first six months of 2025 than in all of 2024, with six consecutive months of inflows totaling $16 billion.