Global flows into exchange-traded products fell to $199.4 billion in May, down from $212.4 billion the previous month, according to analysis from asset manager BlackRock. The dip was driven largely by a sharp drop in equity fund inflows, which slumped to $106.4 billion — the lowest monthly figure for global equity exchange-traded product (ETP) inflows since January.
European ETF and ETC (exchange-traded commodity) flows also moderated, falling to €38.0 billion in May from €40.2 billion in April, data from investment research firm Morningstar showed. “Investor demand for ETFs remained resilient in May, even as flows moderated slightly from April’s peak,” said Jose Garcia-Zarate, senior principal at Morningstar. “Equities continued to dominate allocations, supported by strong market performance and sustained interest in US exposure.”
Technology drives equity inflows despite broader slowdown
Within equity ETPs, technology was the standout sector, attracting $14.4 billion of inflows, according to BlackRock. Garcia-Zarate attributed much of this demand to the forthcoming SpaceX initial public offering, noting that the VanEck Space Innovators ETF (LON:JEDG) was among the top 10 flow-gathering ETFs in May. The ETF, which has gained 230% over the past year, was boosted by anticipation of SpaceX’s listing. Several ETFs that hold private SpaceX shares saw combined net inflows of $7.9 billion in May, while Defiance ETFs announced the pending launch of a 2X leveraged SpaceX ETF (SPCU) designed to provide daily leveraged exposure to SpaceX stock once it becomes publicly tradable.
Beyond technology, the only sectors to record meaningful inflows were industrials ($2.7 billion) and energy ($1.5 billion), BlackRock said. Semiconductor ETFs also gained traction: the VanEck Semiconductor ETF (SMGB) moved up to second place on Interactive Investor’s list of most-bought ETFs in May, while cybersecurity ETFs dominated the list of best-performing ETFs during the month.
UK investor trends reflected a similar appetite for tech exposure. Fidelity’s best-selling ETFs in May included semiconductors, space, and quantum computing funds alongside global trackers. Interactive Investor’s most-bought ETFs also featured a mix of technology and global tracker funds.
Fixed-income ETPs hit record inflows as caution prevails
In stark contrast to the risk-on appetite for tech equities, investors poured a record $87.7 billion into fixed-income ETPs in May, according to BlackRock. The surge suggests a more cautious market sentiment, with investors seeking stability amid persistent inflation concerns and geopolitical tensions. In Europe, bond ETFs attracted €9.9 billion in April, up from €7.9 billion in March, with a focus on government bonds.
The divergence between cautious fixed-income buying and bold tech equity bets was also evident in gold flows. Gold ETPs saw inflows shrink sharply to just $0.3 billion in May, a notable retreat from previous months. However, in Europe, precious metals ETCs — particularly physical gold products — had attracted €2.7 billion in April. Separately, US spot Bitcoin ETFs experienced significant outflows in May, losing over $2.6 billion between 15 May and late in the month, with analysts attributing the sell-off to rising Treasury yields, dollar strength, and geopolitical pressure.
The broader economic backdrop of “higher-for-longer” interest rates and the US-Iran conflict has contributed to a risk-off sentiment, prompting outflows from rate-sensitive sectors such as utilities and real estate.
Regional divergence: US only positive, emerging markets haemorrhage
Of regionally focused equity ETPs, only those targeting the US received positive inflows in May, though the total dipped to $103.3 billion from $121.9 billion in April. According to BlackRock, this marked the first time since May 2018 that US equities were the sole regional equity exposure with positive inflows.
Emerging market equity ETPs suffered the heaviest outflows of any region, losing $40.4 billion in May. The flight from emerging markets contrasted with a sharp rebound in European ETF and ETC flows earlier in the year: following a cautious March, April saw a clear reset in sentiment, with the European ETF and ETC market surpassing the €3 trillion barrier.
UK investors, meanwhile, turned to safe-haven demand for gold amid domestic political uncertainty and concerns about the government’s fiscal trajectory. Active ETFs in Europe continued to gain ground, with assets reaching €85.6 billion by the end of March, according to the research briefing.
Recent analysis of the most popular funds and stocks with DIY investors on Interactive Investor revealed a split between cautious strategies and risk-seekers — a trend borne out by BlackRock’s data. The dichotomy was laid bare in May’s record fixed-income inflows and the $7.9 billion wave into SpaceX-linked ETFs, underscoring how investors are simultaneously hedging against uncertainty while chasing the next high-growth narrative.
