Risk-on ETF flows in a river of hills market
Track shifting investor sentiment through our latest ETF flows analysis.
Markets didn’t climb steadily in a straight path in April—they surged in a series of hard-to-see twists and turns. And given the headlines and news flow, it feels like it will never end.
Like driving along the “River of Hills” in California’s Anza-Borrego Desert, long distance visibility has been limited in today’s market.1 Each crest reveals a new stretch of road, but not what lies beyond it. And yet, despite that uncertainty, risk assets pushed higher in April—fueled by tempered expectations of ceasefires and peace talks, strong earnings results, and continued optimism tied to the productivity potential of AI.
Global equities rose 10% (seventh-best all-time) and US equities rallied almost 11% in April—in the 98th percentile of monthly returns since 1928.2
Here’s how investors positioned amid the renewed risk taking.
ETFs post second-best monthly inflow ever
With global equities staging an epic rally, risk-on buying behavior returned.
Prior to April, the rolling 12-week differential between equity and bond ETF flows had been on a downward trend, falling by 15% from its recent peak.
But with equity ETF exposures registering $139 billion in April (second-most ever), this rolling differential popped by 17% from the March month-end reading—soaring back over the 90th percentile after dipping down near the 80th percentile (Figure 1).
This surge sent 2026 total industry inflows over $600 billion at the end of April—the fastest ETFs have reached that level. Part of momentum strength is from secular trends of low-cost and active. Yet, in April those two cohorts accounted for “only” 72% of flows—below their 12-month pace of 80%—signaling tactical allocations helped drive April strength.
These record inflows so far this year mean ETFs are on pace for an earth-shattering record $2 trillion of inflows for 2026.
Equity inflows highlight risk-on optimism
US equity ETFs took in $108 billion, 77% of all equity inflows, blunting the recent trend of greater geographical diversification and less concentration of capital in US exposures. Prior to April, US ETFs accounted for only 46% of all equity inflows. That figure now stands at 56%.
Despite the recent renewed concentration in US-focused ETFs, the 77% inflow share is slightly below their 79% share of assets. So, there was still some geographical diversification sought.
That’s also reflected by the strong flows into single-country exposures. Single-country ETFs had their eighth-most inflows ever, taking in $4.5 billion in April.
Figure 2: Geographic flows
| In millions ($) | April | Year-to-date | Trailing 3-month | Trailing 12-month | Year-to-date (% of AUM) |
|---|---|---|---|---|---|
| US | 108,360 | 239,132 | 201,405 | 741,168 | 2.82% |
| Global | 12,848 | 47,098 | 34,331 | 91,834 | 16.31% |
| International: Developed | 10,296 | 72,750 | 55,522 | 174,027 | 6.54% |
| International: Emerging markets | 3,567 | 34,703 | 14,155 | 68,164 | 9.35% |
| International: Region | -616 | 3,206 | -19 | 12,289 | 3.27% |
| International: Single country | 4,545 | 19,850 | 13,925 | 32,442 | 13.27% |
| Currency-hedged | 387 | 1,962 | 1,022 | 2,390 | 5.08% |
Source: Bloomberg Finance, L.P., State Street Investment Management, as of April 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.
Sector flows roared back too. After $5 billion of outflows in March, sectors took in $13 billion in April (fifth-best).
Inflows were concentrated in Technology (+12 billion) after the sector gained 17% last month amid the reversal in sentiment and in anticipation of strong earnings. Those results are carrying the broad market’s earnings profile, as mega-cap tech is expected to post a 61% year-over-year growth rate this quarter compared to a still-healthy 16% for the rest of the market.3
Cyclicals took in $3 billion as a combined group, led by $2 billion into the Industrial sector. Aerospace & Defense industry exposures continued to drive Industrials’ inflows; $400 million in April adds up to $2.4 billion so far this year and $8 billion over the past 12 months. This elevated interest coincides with the reworking of the global geopolitical macro paradigm and the likelihood of continued increased defense spending worldwide.
Figure 3: Sector flows
| In millions ($) | April | Year-to-date | Trailing 3-month | Trailing 12-month | Year-to-date (% of AUM) |
|---|---|---|---|---|---|
| Technology | 11,598 | 16,137 | 14,035 | 24,551 | 4.67% |
| Financial | 734 | -1,193 | -5,101 | -1,870 | -1.25% |
| Health Care | -667 | 306 | -2,119 | 1,395 | 0.33% |
| Consumer Discretionary | 307 | -1,678 | -756 | -434 | -4.15% |
| Consumer Staples | -1,282 | -882 | -1,041 | -1,445 | -3.51% |
| Energy | -332 | 11,943 | 7,708 | 9,765 | 19.52% |
| Materials | 1,115 | 6,884 | 456 | 12,279 | 9.91% |
| Industrials | 2,128 | 8,463 | 5,447 | 19,158 | 11.97% |
| Real Estate | -761 | -50 | 127 | 3,853 | -0.07% |
| Utilities | -429 | -182 | 1,072 | 4,152 | -0.49% |
| Communications | 785 | -1,277 | -1,229 | 1,677 | -3.51% |
Source: Bloomberg Finance, L.P., State Street Investment Management, as of April 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.
Together, these sizable April inflows have pushed the year-to-date sector total to more than $38 billion. That’s a stark reversal from last year when geopolitical uncertainty led to $17 billion of sector outflows by the end of April.
Many signs of risk taking in bonds
Within fixed income flows there were multiple signs of risk taking:
- Credit-sensitive sectors had $15 billion of inflows, led by the $7 billion into investment-grade corporate bond ETF exposures
- The $4 billion of inflows into high yield was a reversal of the year-to-date trend
- Convertible bond ETFs, a hybrid allocation akin to a risk-controlled growth equity exposure, had $1 billion of inflows in April (the second-most ever)
- Ultra- and short-term government bond ETFs had outflows, after record inflows in March
Stripping out these risk on bond sectors from the bond side of the rolling equity to bond flow differential reinforces the broader shift toward risk seeking behavior in April.
Inflation-linked bond ETFs had $1.7 billion of inflows in April, their 13th month out of the past 14 with inflows. Fixed income’s $11 billion of inflows over the past 12 months suggests that investors aren’t willing to accept the risk of stubborn inflation and are seeking ways to mitigate its impact on portfolios.
Figure 4: Fixed income flows
| In millions ($) | April | Year-to-date | Trailing 3-month | Trailing 12-month | Year-to-date (% of AUM) |
|---|---|---|---|---|---|
| Aggregate | 10,490 | 72,665 | 46,632 | 202,584 | 8.87% |
| Government | 574 | 48,943 | 42,668 | 109,048 | 9.26% |
| Short-term | -2,305 | 39,920 | 35,211 | 71,427 | 15.67% |
| Intermediate | 788 | 13,109 | 8,226 | 36,522 | 8.29% |
| Long-term (>10 yr) | 2,091 | -4,085 | -769 | 1,099 | -4.55% |
| Inflation-protected | 1,701 | 4,305 | 4,861 | 11,219 | 6.18% |
| Mortgage-backed | 392 | 3,297 | 2,664 | 12,657 | 3.29% |
| IG corporate | 6,941 | 25,290 | 19,166 | 58,473 | 8.26% |
| High yield corp. | 3,769 | -1,827 | -1,525 | 21,586 | -1.63% |
| Bank loans and CLOs | 2,536 | 6,746 | 2,630 | 17,611 | 11.29% |
| EM bond | 203 | -5 | -1,581 | 6,520 | -0.01% |
| Preferred | 368 | 599 | 573 | 2,439 | 1.51% |
| Convertible | 1,093 | 1,999 | 794 | 3,604 | 22.80% |
| Municipal | 4,155 | 16,403 | 10,204 | 49,841 | 8.75% |
Source: Bloomberg Finance, L.P., State Street Investment Management, as of April 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.
Navigating the long and winding road ahead
While the April rally appeared powerful on the surface, its breadth was narrow. Only 26% of global stocks beat the index.4 That divergence underscores the broader moment: nothing is as clear as it seems.
Structurally, the global backdrop continues to evolve with muddled clarity—defined less by cyclical fluctuations and more by lasting shifts: deglobalization, policy fragmentation, the prioritization of self-sufficiency, and rising geopolitical competition.
Layer in the potential impact of changes in Federal Reserve leadership and US midterm elections, and the policy road ahead is no more visible than the next 100 yards on the River of Hills. Markets are navigating not just one hill of uncertainty, but shifting frameworks with potential cascading impacts on how inflation, growth, and financial conditions will be balanced going forward.
April gains are welcome, but volatility cuts both ways. Investors’ goal isn’t to guess what’s over the next hill—but to be ready for whatever comes after it. Building portfolios around balance, resilience, and diversification can help navigate both the sharp rises and the sudden dips, rather than relying on a single gear to carry them through.