ETF inflows set records in first half
Track shifting investor sentiment through our latest ETF flows analysis.
Markets in the first half of 2026 have felt less like a clean studio track and more like a Dave Matthews Band (DMB) live set—unpredictable, extended, and occasionally contradictory—but still somehow holding the crowd with positive vibes.
Like any DMB setlist, given the depth of their catalog, the crowded macro setlist has been hard to predict this year. Familiar themes have remained in rotation, but the order—and the market's reaction—has constantly changed.
In other words, although investors have had plenty of reasons to say macro risks were “too much,” risk assets have continued playing the song that portfolio returns like. And ETF fund flows showed investors tried to make the best of what’s around too.
First half inflows top $1 trillion
June’s $196 billion inflow pushed year-to-date totals past $1 trillion—the first time flows have crossed that threshold in the first half. If the year ended today, the first six months of 2026 would rank as the third-largest full calendar year total on record.
With seasonally stronger second-half demand—especially the typical Q4 pickup—we project full-year 2026 flows to reach $2.3 trillion (Figure 1), setting a new annual record and far outpacing 2025’s record $1.5 trillion. In fact, rolling 12-month flows are already at $2 trillion—a new record for any 12-month period and an early indication that a $2.3 trillion year may be within reach.
Supportive market returns and strong inflows to start the year have pushed total US-listed ETF assets to $15.8 trillion—a new high-water mark for assets.
Equity and bond ETFs nearly had a combined $1 trillion by themselves in the first half of 2026. These record-setting inflows were supported by three mega forces:
- Low-cost ETFs, exposures that help investors build durable, cost-efficient asset allocation portfolios, took in 49% of all ETF inflows year to date (+$506 billion)
- Active ETFs, diverse strategies focused on seeking alpha, specific outcomes, or providing access to precise thematic trends, took in 39% of all flows year to date (+$398 billion)
- Bond ETFs, a core building block underpinning both low-cost and active portfolio construction, took in $300 billion of inflows year to date, representing 29% of all ETF inflows despite accounting for just 16% of ETF market share
Low-cost and active ETFs are mutually exclusive categories that total 3,368 combined ETFs. That means the remaining 2,000 US-listed ETFs took in just 12% of all inflows. And amid that cohort, 800 had either outflows or no activity at all in 2026—a trend that illustrates that, even amid record-setting high level flows, not every corner of the market is benefiting.
Tech and emerging market inflows stand out amid the crowd
Although US equity ETFs have attracted more flows in dollar terms in 2026 (+$441 billion) than ETFs with more globally diversified exposure (+$228 billion), non-US ETFs have captured a larger share of inflows (34%) than their share of assets (20%). This suggests investors have expressed an implicit overweight to non-US markets as they seek greater regional diversification in portfolios.
One non-US market that has received outsized interest has been emerging market (EM) ETF exposures. The $2.2 billion of inflows pushed 2026 flows to $38 billion. This is the most flows for EM ETFs in the first half of any calendar year. In fact, it’s more than the record $35 billion amassed in all of 2025. There has been depth to the 2026 EM ETF flows too; 73% of the funds have had inflows this year.
Figure 2: Geographic flows
| In millions ($) | June | Year to date | Trailing 3-month | Trailing 12-month | Year to date (% of AUM) |
|---|---|---|---|---|---|
| US | 111,719 | 441,367 | 308,193 | 883,042 | 5.20% |
| Global | 7,431 | 64,951 | 30,116 | 103,937 | 22.36% |
| International: Developed | 15,884 | 101,524 | 39,150 | 180,467 | 9.13% |
| International: Emerging markets | 2,277 | 38,481 | 7,599 | 63,885 | 10.37% |
| International: Region | -655 | 1,314 | -2,539 | 8,064 | 1.34% |
| International: Single country | 3,006 | 19,901 | 4,597 | 25,727 | 13.30% |
| Currency hedged | 467 | 2,447 | 864 | 3,748 | 6.34% |
Source: Bloomberg Finance, L.P., State Street Investment Management, as of June 30, 2026. The top two/bottom two categories per period are highlighted. Performance data quoted represents past performance. Past performance does not guarantee future results.
Sectors had $17 billion of inflows in June, but $13 billion was into Tech. That 78% share of all sector inflows is well above Tech’s share of sector assets (45%) and a clear indication of a concentrated overweight position. This is despite Tech falling 3.3% on the month as headlines on new AI regulatory actions and debt and share issuance fueled spending fears.1
The concentrated flows into Tech masks the broader sector picture. Industrials led all other sectors in June, with $2.2 billion of inflows. It is also the sector with the second-most inflows on the year, allocations that have been rewarded as the sector is the best performer so far in 2026 (+19.5%).2
Figure 3: Sector flows
| In millions ($) | June | Year to date | Trailing 3-month | Trailing 12-month | Year to date (% of AUM) |
|---|---|---|---|---|---|
| Technology | 13,362 | 44,760 | 40,384 | 51,155 | 12.94% |
| Financial | 2,185 | -1,761 | 651 | -761 | -1.84% |
| Health Care | 2,213 | 1,018 | 564 | 3,876 | 1.11% |
| Consumer Discretionary | -646 | -1,850 | 42 | -1,467 | -4.58% |
| Consumer Staples | -1,605 | -1,875 | -2,245 | -2,837 | -7.47% |
| Energy | -3,033 | 9,421 | -2,551 | 7,981 | 15.40% |
| Materials | 897 | 6,208 | 595 | 12,173 | 8.94% |
| Industrials | 2,253 | 9,949 | 3,174 | 18,729 | 14.08% |
| Real Estate | 1,907 | 3,674 | 3,029 | 6,331 | 5.39% |
| Utilities | 217 | -823 | -1,234 | 2,874 | -2.22% |
| Communications | -621 | -1,840 | 135 | -416 | -5.06% |
Source: Bloomberg Finance, L.P., State Street Investment Management, as of June 30, 2026. The top two/bottom two categories per period are highlighted. Performance data quoted represents past performance. Past performance does not guarantee future results.
Three bond trends power flows
There are three noticeable prevailing trends within fixed income ETFs from a market positioning perspective.
- Limiting duration: Amid the repricing of Fed rate cut expectations, as well as higher front-end rates around the world as other central banks have reversed course on the coordinating easing cycle from 2024/2025, short-term government bond exposures took in $8 billion in June to total $58 billion for the year.
By contrast, long-term government bond ETFs had $1 billion of outflows in June and $6.5 billion of outflows year to date, underscoring investors’ preference for limiting duration risk.
- Infusing inflation resilience: With inflation running above trend (CPI is 4.2%) and the effects of macro fragmentation, inflation-linked bond (IL bond) ETFs gathered $2 billion in June on top of the $6 billion already allocated this year leading up to the month.
This is the 17th month out of the past 18 where IL bond ETFs have had inflows, as these inflationary pressures are not a result of one single action or provocation but a reflection of inflation being a more durable risk factor to portfolios due to the shift from globalization to deglobalization.
- Overweighting credit: Led by investment-grade corporate bond ETFs (+$11 billion), credit-related sector ETFs had $17.8 billion of inflows in June. They now have taken in $62 billion on the year. And more recently, high yield and bank loans have received inflows, reversing trends from prior periods.
The renewed interest in below investment-grade markets arrives as fundamentals remain resilient and income opportunities scarce. And for bank loans, the modest $184 million of inflows in June helped push that credit sector to a positive position to end the first half of 2026. Allocations have coincided with the repricing of Fed expectations, which has favored floating-rate exposures.
Figure 4: Fixed income flows
| In millions ($) | June | Year to date | Trailing 3-month | Trailing 12-month | Year to date (% of AUM) |
|---|---|---|---|---|---|
| Aggregate | 18,067 | 120,241 | 56,186 | 220,472 | 14.70% |
| Government | 8,432 | 70,997 | 21,271 | 127,531 | 13.44% |
| Short term | 8,145 | 58,215 | 15,699 | 91,020 | 22.85% |
| Intermediate | 1,340 | 19,298 | 6,659 | 41,039 | 11.79% |
| Long term (>10 yr) | -1,053 | -6,515 | -1,088 | -4,528 | -7.25% |
| Inflation-linked | 1,941 | 8,846 | 6,251 | 13,624 | 12.69% |
| Mortgage backed | 1,851 | 6,652 | 3,817 | 12,458 | 6.65% |
| IG corporate | 10,875 | 41,559 | 24,219 | 67,042 | 13.57% |
| High yield corp. | 4,224 | 4,137 | 9,555 | 18,669 | 3.71% |
| Bank loans | 184 | 131 | 2,107 | -328 | 0.64% |
| Asset backed | 1,839 | 11,707 | 5,492 | 19,118 | 29.83% |
| EM bond | 579 | 511 | 406 | 5,146 | 1.47% |
| Preferred | 304 | 1,644 | 1,389 | 3,393 | 4.15% |
| Convertible | 400 | 3,180 | 2,213 | 4,775 | 36.26% |
| Municipal | 6,340 | 30,372 | 18,934 | 57,799 | 16.20% |
Source: Bloomberg Finance, L.P., State Street Investment Management, as of June 30, 2026. The top two/bottom two categories per period are highlighted. Performance data quoted represents past performance. Past performance does not guarantee future results.
Second half may have the same crowded macro markets
First half market resilience had been powered by supportive economic growth, improving manufacturing data, and healthy labor trends. But more broadly, company fundamentals and cash flows.
Earnings—the rhythm section of this bull market—have kept markets moving forward, helping investors look past a steady drumbeat of macro concerns. Yet, when the earnings calendar fades and companies don’t have so much to say, macro risks grab the spotlight and bend the market lower. June market weakness was the latest example of this.
Now, like the first half, the second half of 2026 may bring a few unexpected tempo changes. Investors will continue to navigate the implications of AI-related capital spending, shifting global monetary policies, contentious US midterm elections, another election cycle in the UK, and a geopolitical backdrop that remains fragile and difficult to predict.
Together, these forces create a landscape that can feel increasingly complex—a Grey Street of overlapping risks and competing signals. But if the first half taught investors anything, it’s not to spend time trying to predict the next headline or market inflection point.
This is not a monoculture market. A confluence of overlapping risks may disrupt rhythms. And the future may feel more fragmented, uncertain, and crowded than the environment investors grew accustomed to over the past decade.
Today, portfolios built to navigate different economic environments—not just one outcome—may be better positioned for whatever lies ahead. Before these Crowded Streets get any busier, preparation may matter more than prediction.
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