ETF inflows set records as leadership narrows
Track shifting investor sentiment through our latest ETF flows analysis.
As this summer’s World Cup kicks off across North America—with a larger, more crowded field than ever and many teams not used to the sweltering heat—it might feel like markets also are entering the tougher knockout stage. That’s because S&P 500 firms just handled the most recent earnings season like a tournament favorite powering through their group play.
With nearly all S&P 500 companies reporting, results have been as strong as a Lionel Messi penalty kick. Earnings are tracking at their fastest growth rates since Q4 2021 (+28.6%).1 But like any tournament, advancing introduces new pressures—where a single mistake, a deflection, or even a penalty shootout can decide the outcome.
With earnings season effectively complete, the primary driver of market performance will shift from fundamental strength to the more tenuous macro uncertainty.
Here’s how investors are positioned heading into June—and World Cup season!
Record fixed income flows don’t signal risk off sentiment
US-listed ETFs had $185 billion of inflows in May—eclipsing April’s $177 billion for a new second-best total. 2026 inflows are now $830 billion, and our projections show them hitting $1 trillion on June 26.
Bond ETFs drove the headline figures in May with a record-setting $64 billion inflow that accounted for 29% of total ETF inflows, well above fixed income’s 16% share of ETF assets. That pushed total fixed income ETF assets over $2.5 trillion for the first time.
Instead of signaling a risk-off shift, the record inflows underscore fixed income’s role as a key secular growth driver for the ETF industry and reflect four positioning trends:
- Inflation resilience sought: Stubborn inflation trends helped inflation-linked bond ETFs take in $2.6 billion of inflows in May—their 16th month out of the past 17 with inflows, a time period with $19 billion of inflows.
- Long-term bonds sold: Driven by inflation risks and wider term premiums, long-term US Treasury ETF had $1.4 billion of outflows in May, pushing year-to-date outflows over $5 billion.
- Higher-for-longer meant a dash for cash: With the potential for no rate cuts in 2026, ultra-short and short-term government bond ETFs took in $10 billion in May, and inflows now total $50 billion on the year.
- Credit bought: Credit-sensitive sectors saw $9 billion of inflows as fundamental growth trends remain resilient.
Figure 1: Bond sector flows
| In millions ($) | May | Year-to-date | Trailing 3-month | Trailing 12-month | Year-to-date (% of AUM) |
|---|---|---|---|---|---|
| Aggregate | 29,032 | 101,783 | 52,960 | 218,590 | 12.43% |
| Government | 11,493 | 60,392 | 42,407 | 113,330 | 11.43% |
| Short-term | 10,150 | 50,070 | 36,826 | 83,215 | 19.65% |
| Intermediate | 2,734 | 15,798 | 7,578 | 37,133 | 9.85% |
| Long term (>10 yr) | -1,390 | -5,475 | -1,997 | -7,017 | -6.10% |
| Inflation-protected | 2,602 | 6,902 | 5,649 | 12,379 | 9.90% |
| Mortgage-backed | 1,510 | 4,807 | 2,794 | 11,936 | 4.80% |
| IG corporate | 5,405 | 30,685 | 12,722 | 57,910 | 10.02% |
| High yield corp. | 1,578 | -90 | 236 | 19,052 | -0.08% |
| Bank loans | 916 | -52 | 1,334 | -85 | -0.25% |
| Asset-backed | 2,154 | 9,868 | 4,490 | 18,629 | 25.14% |
| EM bond | -63 | -68 | -2,097 | 6,229 | -0.20% |
| Preferred | 741 | 1,340 | 921 | 3,228 | 3.38% |
| Convertible | 781 | 2,780 | 1,083 | 4,489 | 31.69% |
| Municipal | 7,633 | 24,031 | 16,146 | 55,162 | 12.82% |
Source: Bloomberg Finance, L.P., State Street Investment Management, as of May 29, 2026. The top two/bottom two categories per period are highlighted. Performance data quoted represents past performance. Past performance does not guarantee future results.
Equity positioning more concentrated
While fixed income saw broad-based support across sectors, equity fund flows were more concentrated.
US, global, and international-developed ETFs captured 96% of all inflows, a rate above their share capture over the trailing 12 months (87%) and market share of assets (92%).
This illustrates limited appetite to go fully risk-on and make more granular specific allocations at the regional or single-country level. Instead, investors opted for broad markets to express growth optimism. And while emerging markets had inflows, driven by strong recent returns and the connection to AI, they were below their recent 36-month average (+$2.5 billion). And single-country ETFs saw more outflows (21) than inflows (18). This reverses the pattern seen so far this year; 28 markets have had inflows compared to 15 with outflows in 2026.
Figure 2: Geographic flows
| In millions ($) | May | Year-to-date | Trailing 3-month | Trailing 12-month | Year-to-date (% of AUM) |
|---|---|---|---|---|---|
| US | 89,918 | 329,122 | 237,925 | 803,145 | 3.88% |
| Global | 11,778 | 57,504 | 35,021 | 100,574 | 19.79% |
| International: Developed | 12,619 | 85,369 | 44,116 | 176,893 | 7.68% |
| International: Emerging markets | 1,467 | 36,170 | 4,485 | 68,687 | 9.75% |
| International: Region | -1,236 | 1,969 | -2,584 | 9,251 | 2.01% |
| International: Single country | -3,006 | 16,845 | 719 | 25,513 | 11.26% |
| Currency-hedged | 31 | 1,980 | 309 | 3,528 | 5.13% |
Source: Bloomberg Finance, L.P., State Street Investment Management, as of May 29, 2026. The top two/bottom two categories per period are highlighted. Performance data quoted represents past performance. Past performance does not guarantee future results.
Concentration was also evident within sectors. Sectors had $9 billion of inflows in May. But excluding Technology, sectors had $4 billion of outflows.
Both cyclicals (-$4 billion) and defensives (-$1.7 billion) had net outflows as well. Given that only three sectors had positive returns in May, this lack of inflow depth is no surprise. But there was depth within the heliocentric Tech flows; 72% of Tech sector and industry exposures had inflows in May.
The rotation into Real Estate is interesting, as the flows are not supported by strong price momentum or robust earnings growth/sentiment. Real estate’s real asset-like return profile and positive correlation to inflation may be driving the inflows.2
Meanwhile, Energy continued its run of inflows (+$500 million), despite the sector falling 6% during May. Inflows now total $12 billion year to date, surpassing the previous calendar-year record of $11 billion set in 2021.3
Figure 3: Sector flows
| In millions ($) | May | Year-to-date | Trailing 3-month | Trailing 12-month | Year-to-date (% of AUM) |
|---|---|---|---|---|---|
| Technology | 12,991 | 31,399 | 23,424 | 38,873 | 9.08% |
| Financial | -2,752 | -3,945 | -2,632 | -3,127 | -4.13% |
| Health Care | -1,501 | -1,195 | -3,791 | 553 | -1.30% |
| Consumer Discretionary | 474 | -1,204 | 124 | 50 | -2.98% |
| Consumer Staples | 612 | -270 | -733 | -1,364 | -1.07% |
| Energy | 506 | 12,450 | 4,842 | 10,660 | 20.35% |
| Materials | -1,573 | 5,311 | -2,470 | 11,504 | 7.65% |
| Industrials | -768 | 7,694 | 135 | 17,245 | 10.88% |
| Real Estate | 1,816 | 1,767 | 1,495 | 5,288 | 2.59% |
| Utilities | -858 | -1,040 | -144 | 3,050 | -2.80% |
| Communications | 58 | -1,219 | -857 | 1,168 | -3.35% |
Source: Bloomberg Finance, L.P., State Street Investment Management, as of May 29, 2026. The top two/bottom two categories per period are highlighted. Performance data quoted represents past performance. Past performance does not guarantee future results.
Preparing for the next, more macro-driven, stage
As we move into the next phase, the macro-driven setup looks less like a wide-open group stage and more like a knockout round where the path forward depends as much on macro risks as it does on resilient underlying fundamentals. Notably, just 33% of S&P 500 firms beat the index return in May—a reading that sits in the bottom 5th percentile.4
The headlines moving away from company-level results toward a macro environment shaped by policy uncertainty, geopolitical conflicts, and shifting inflation dynamics present risks to both stocks and bonds. And June can be uneven. Since 1956, average June monthly returns rank as the fourth-worst out of any month, with an average return of 0.14% versus a normal 0.70% average monthly return.5
Portfolio construction at a time like this calls for balance and resilience—more like a team with depth, structure, and a strong bench rather than one overly reliant on a single star player or style of play. In both markets and tournaments, a single approach can work at times, but leadership does not persist.
Just ask Italy: a four-time World Cup winner and a top 15-ranked team that has now missed out on the past three World Cups.