A feast of ETF inflows and returns
Track shifting investor sentiment through our latest ETF flows analysis.
Every festive holiday dish should bring something to the table—the turkey, the holiday ham, the stuffing, even your cousin’s attempt at a green bean casserole. Likewise, in 2025, major asset classes each delivered something special to portfolios.
Despite policy shifts and macro uncertainty, it’s been a good year for assets. Global stocks, bonds, and commodities all outperformed cash.1 This is the first time all three major asset classes have beaten cash at the same time since 2019,2 a balance as satisfying as perfectly seasoned gravy.
While investor allocations indicate many are feasting only on a portion of the asset class spread—72% of combined US-listed mutual fund and ETF assets sit in equities, mostly US equities3—the latest ETF flows indicate investors are starting to warm up to new dishes.
Emerging market equity inflows rise
US-listed ETFs had over $140 billion in inflows in November, pushing year-to-date flows to a new annual record of $1.25 trillion—within reach of our projected $1.4 trillion for the year.
Record annual flows can sometimes hide specific sentiment signals beneath the surface—like renewed interest in emerging market (EM) equities. EM equity ETFs posted their fourth-best month for flows in November, taking in over $7 billion. November was also their 10th consecutive month with inflows, pushing EM ETFs’ rolling six-month flow figure to near records (Figure 1).
And it’s not exposures that remove China fueling inflows like they did in 2024. In fact, those EM ex-China exposures are in net outflows over the past six months, underscoring investors’ preference for “pure broad-based EM” with optimism supported by recent returns, economic and fundamental growth projections, and AI-related tailwinds.
Though still shy of 2024’s record $671 billion, US equity ETFs took in over $70 billion in November, marking their seventh-best month ever and putting them on pace for more than $600 billion on the year.
The fact that US equity exposures will likely fail to set new records shows investors are at least somewhat interested in limiting their concentration to US assets after building up a sizable overweight over the past few years. In fact, all non-US geographic regions had inflows in November and for the year (Figure 2). This broad category is set to top $200 billion of inflows for the year, a new record that signals a gradual move toward global diversification.
Figure 2: Geographic flows
| $M | November | Year to date | Trailing 3-month | Trailing 12-month | Year to date (% of AUM) |
|---|---|---|---|---|---|
| US | 72,921 | 544,342 | 219,528 | 663,462 | 8.04% |
| Global | 4,194 | 42,742 | 22,588 | 48,910 | 18.90% |
| International: Developed | 11,173 | 98,841 | 31,811 | 111,883 | 13.04% |
| International: Emerging markets | 7,428 | 29,523 | 14,191 | 31,857 | 11.14% |
| International: Region | 412 | 16,311 | 4,936 | 12,484 | 27.50% |
| International: Single country | 1,248 | 7,782 | 2,950 | 6,687 | 6.78% |
| Currency hedged | 165 | 5,075 | 900 | 5,458 | 18.78% |
Source: Bloomberg Finance, L.P., State Street Investment Management, as of November 30, 2025. The top two/bottom two categories per period are highlighted. Past performance is not a reliable indicator of future performance.
Sector flows supported by defensives
Sectors had $2 billion inflows in November, a departure from the trailing six-month trend where they averaged $4 billion a month. Still, this marks the seventh straight month of inflows, totaling $26 billion over that stretch run—more than offsetting the $21 billion of outflows earlier in the year during risk-off moves.
Information Technology still had inflows (+$1.2 billion), despite the 4% price loss on the month.4 But the defensive Health Care sector—an unlikely savior given it is in net outflows on the year—propped up November inflows. Following strong earnings results from healthcare firms (second-largest earnings beat magnitude) and the pop in price that ensued (+9% gain in November),5 the sector saw $4 billion of inflows last month and now has $6 billion of inflows over the past three months.
Health Care inflows were offset by an equivalent $4 billion of outflows across cyclicals with Financials losing $2.7 billion and Materials’ $1.6 billion. Outflows across cyclicals are at odds with the economic forecasts for continued expansion. The Atlanta Fed GDPNow Forecast has Q3 GDP growth at a robust 3.8%.6 It is also at odds with Financials’ earnings growth having been upgraded for Q4 2025.7
Figure 3: Sector flows
| $M | November | Year to date | Trailing 3-month | Trailing 12-month | Year to date (% of AUM) |
|---|---|---|---|---|---|
| Technology | 1,293 | 14,596 | 7,079 | 13,282 | 4.76% |
| Financial | -2,646 | -54 | -2,478 | 384 | -0.06% |
| Health Care | 4,060 | -1,235 | 5,865 | -2,539 | -1.42% |
| Consumer Discretionary | -1,483 | -2,248 | -794 | -3,422 | -5.34% |
| Consumer Staples | -418 | -412 | 30 | -108 | -1.51% |
| Energy | 846 | -4,949 | 1,697 | -5,450 | -6.36% |
| Materials | -1,632 | -2,396 | 2,163 | -2,237 | -6.52% |
| Industrials | 391 | 6,475 | 3,989 | 6,983 | 12.21% |
| Real Estate | 887 | 2,048 | 1,578 | 1,851 | 2.60% |
| Utilities | 404 | 6,263 | 1,297 | 5,998 | 23.17% |
| Communications | 120 | 3,230 | 730 | 3,472 | 11.95% |
Source: Bloomberg Finance, L.P., State Street Investment Management, as of November 30, 2025. The top two/bottom two categories per period are highlighted. Past performance is not a reliable indicator of future performance.
Bond inflows to break $400B for the year
With $42 billion added in November, bond ETFs are set to take in $400 billion annually for the first time ever. Low-cost and active strategies combined to account for 66% of the flows in November.
Outside of those areas, inflation-linked bond ETFs continued their run of inflows (now 11 consecutive months) as inflation remains stubborn. Elsewhere, short-term government funds had their 10th most inflows (+$10 billion), despite potential rate cuts wilting returns.
The $6 billion of inflows into the intermediate-term and outflows in the long-term segment indicate investors’ unwillingness to take on outsized duration risks, a year-long trend. Long-term bond flows make up just 5% of all government bond flows in 2025—well below their 18% share of government assets.
Credit sectors added $5 billion in November, representing a strong flow trend of taking growth-biased risks with bonds—one underscored by inflows into convertibles.
This hybrid bond sector, featuring a growth profile more related to equity sensitivity and less to the spread over US Treasurys, had $500 million of inflows November. As a result, convertible bond ETFs’ rolling six-month total is at a record high $1.50 billion.
Figure 4: Fixed income flows
| $M | November | Year to date | Trailing 3-month | Trailing 12-month | Year to date (% of AUM) |
|---|---|---|---|---|---|
| Aggregate | 18,312 | 154,827 | 54,947 | 167,056 | 24.79% |
| Government | 15,182 | 96,191 | 31,679 | 95,830 | 22.95% |
| Short term | 9,873 | 62,772 | 16,377 | 69,863 | 28.45% |
| Intermediate | 6,226 | 28,272 | 14,024 | 27,758 | 19.12% |
| Long term (>10 yr) | -917 | 5,147 | 1,278 | -1,791 | 6.10% |
| Inflation protected | 898 | 11,727 | 3,492 | 11,516 | 20.82% |
| Mortgage backed | -1,834 | 18,213 | 627 | 21,130 | 23.73% |
| IG corporate | 3,464 | 32,097 | 12,388 | 35,661 | 11.95% |
| High yield corp. | 381 | 22,336 | 6,634 | 21,066 | 25.85% |
| Bank loans and CLOs | 796 | 13,174 | 1,451 | 16,063 | 28.10% |
| EM bond | 1,066 | 2,798 | 3,696 | 1,602 | 9.93% |
| Preferred | 68 | 1,792 | 952 | 1,817 | 4.73% |
| Convertible | 456 | 616 | 890 | 974 | 8.74% |
| Municipal | 3,568 | 36,999 | 15,211 | 38,094 | 26.44% |
Source: Bloomberg Finance, L.P., State Street Investment Management, as of November 30, 2025. The top two/bottom two categories per period are highlighted. Past performance is not a reliable indicator of future performance.
Setting the portfolio table for 2026
Unlike past years, returns have not been driven solely by US stocks: 74% of non-US countries (35 of 47) in the MSCI ACWI Index are outperforming the US,8 the largest hit rate of outperformance since 2009. It’s a clear reminder that balance beats concentration, a timeless principle of portfolio construction.9
Some traditions—like diversification—are best left unchanged, just as there’s no need to add a “twist” to your family’s classic pierogi recipe.
This doesn’t mean that US equities should be excluded or are poised for a decline. In fact, the ingredients for supportive returns remain: rising profits, positive economic growth, and increasing liquidity with the growth in money supply and the decline in the cost of money (e.g., lower rates). But global equities have more attractive valuations and deserve a seat at the table.
Just as the best bite of turkey includes stuffing, gravy, and cranberry sauce, building diversified portfolios remains a timeless recipe for resilience, while still leaving room for today’s opportunistic desserts:
- Financials where deregulation may add fundamental tailwinds
- Equal-weighted tech to position for AI with diversification beyond the Magnificent Seven
- AI-ecosystem trades, like Utilities, receiving capital injections
- US and non-US small caps for growth potential and constructive valuations
- Short-duration securitized credit to boost income without sacrificing stability.