April highlights
- In April 2025, the Morningstar Global 60/40 Index saw a 0.76% rise, recovering from previous monthly losses.
- US exchange-traded funds (ETFs) raised $58 billion during the month.
- The UltraShort-Bond ETF attracted significant interest with a $15 billion inflow.
- The Vanguard S&P 500 ETF maintained its position as the largest ETF by net worth.
- There was a negative impact on the iShares Core S&P 500 ETF due to some leaks that affected its flows.
Stock ETF Performance: Markets hit choppy waters in April
On April 2, President Trump announced a series of tariffs, which created market uncertainty. As a result, US stocks dropped sharply, hitting a low on April 8. International stocks were also affected. Later that month, Trump eased many tariffs, leading to a market rebound.
Despite the recovery, overall US stock returns for the month closed negatively. The iShares Core S&P Total US Stock Market ETF (Itot) tracks the entire US market and experienced an 11.69% drop from April 1 to 8, and managed to recover only 84 basis points for the month.
For the year, the picture wasn’t rosy either. By the end of April, Itot had fallen 5.93%, with most US stock ETFs following suit. The average for the Morningstar category for larger blends declined by 4.93% in the same timeframe, while a few international stock ETFs managed to limit their losses.
Interestingly, despite the market fluctuations, a blended global portfolio gained 76 basis points in April. Both the Vanguard Total Bond Market ETF and the Vanguard Total International Bond ETF remained stable through the disruptions, while the Vanguard Total World Stock ETF rebounded nicely after reaching its low on April 8.
The iShares MSCI USA Momentum Factor ETF (MTUM) fared well despite the chaos, initially falling with other US stock funds but finishing the month with a 3.71% return. Remarkably, it enjoyed positive performance for the year as well.
Sector equity leaks continue as investors pull out of financial and energy ETFs
Sector ETFs faced increased challenges in April, as investors withdrew a staggering $13.9 billion, adding to the $6.4 billion pulled in March. The finance and energy sectors saw the most outflows, totaling $6.8 billion.
Historically, sector ETFs have had mixed results. In 2024, they attracted $29.8 billion, but this was overshadowed by $15.1 billion and $12.4 billion in outflows in the following two years. Most sectors struggled in the first four months of 2025, with the energy sector ETF witnessing a $6.9 billion withdrawal. However, the Technology Sector ETF stood out, seeing a $2.6 billion inflow by the month’s end.
State Street ETFs took a significant hit, with $8.2 billion flowing out of its sector ETFs. Both the Energy Selection Sector SPDR ETF and Financial Select Sector SPDR ETF lost a combined $4.3 billion in April.
Despite these challenges, US equities and taxable bond ETFs together recorded a considerable $42.3 billion influx, though it fell short of the $64.1 billion total in January. The figures for April suggest a resilient investor base, navigating through uncertain times.
Investors seek safety in ultra-short bond ETFs amid market uncertainty
Interestingly, small blend stock ETFs encountered the most outflows among categories in April. The allocation ETFs, holding a mix of stocks and bonds, also experienced slight outflows. This trend coincides with Trump’s focus on tariffs against Chinese companies, which negatively impacted Chinese stock ETFs, leading to a $4.1 billion outflow.
In contrast, there was a marked increase in ultra-short bond purchases during April, likely as investors sought refuge from stock market volatility. Cash alternatives like the SPDR Bloomberg 1-3 Month T-Bill ETF and ISHARES 0-3 MONTH TREASURY BOND ETF attracted $6 billion and $5.5 billion, respectively.
S&P 500 Tracker VOO buoys Vanguard ETF inflows
The Vanguard ETF flows outperformed competitors in April, particularly with a massive increase into the Vanguard S&P 500 ETF (VOO), which surpassed other S&P 500 trackers. This shift had VOO surpassing the SPDR S&P 500 ETF Trust (SPY) for the first time on February 18, 2025. After regaining its lead in March, VOO continued to dominate in April, seeing an influx of $20.1 billion, compared to SPY’s $2 billion. This discrepancy reflects the behavior of Vanguard clients, who typically demonstrate more stable investment patterns.
Charles Schwab’s ETFs also performed admirably, with investors adding $12.4 billion in April—about 3% of their net ETF assets.
On the flip side, April was particularly harsh for iShares, witnessing $8.9 billion in outflows. The iShares Core S&P 500 ETF (IVV) had $13.8 billion withdrawn. However, the ISHARES 0-3 MONTH TREASURY BOND ETF managed to help cushion the blow, securing $5.5 billion. Generally speaking, flows for iShares and State Street often begin slowly at the year’s outset but typically accelerate later in the year, as both firms have historically seen robust growth in the final quarter from 2009 to 2024.
