ETF Prime: Chang Highlights ETF Flow Trends in 2025

Over $100 billion went into ETFs in January, continuing the strong pace seen last year as ETFs saw over $1 trillion in inflows in 2024.

“We’ve seen strong inflows across the board — equities and fixed income alike. I think that’s a reflection of continued bullish sentiment on the stock market overall,” Chang said. “We obviously had that post-election surge to cap off last year.”

Chang said equity ETFs have been the stars of the show early on, as many investors look to rebuild their risk positions in equities. However, given all the uncertainty around the Fed, money markets are still seeing big inflows. 

“[Money market funds are] at $7 trillion now, so plenty of dry powder on hand,” Chang said. “I think there’s generally a pro-risk attitude, given underlying strength in the economy, tempered by some of the shifting fed mentality, trade war sentiment, AI cost concerns in the wake of the DeepSeek scare.”

The Vanguard S&P 500 ETF (VOO A) saw record high inflows in January, garnering about $21 billion. That’s nearly a quarter of all the inflows for the year already, Chang said.

“Probably just a matter of days before we see it eclipse the SPDR S&P 500 ETF Trust (SPY A-) as the largest ETF out there. Though, of course, SPY’s still dominant in terms of liquidity,” Chang added.

To continue, in January, $4 billion went into the Vanguard Total Stock Market ETF (VTI A). Other funds that saw strong flows in January include the Invesco NASDAQ 100 ETF (QQQM B+), the Vanguard Growth ETF (VUG B+), the Vanguard Information Technology ETF (VGT A), and the Financial Select Sector SPDR Fund (XLF A).

“SPY has actually seen the biggest outflows so far as investors kind of flock to the SPDR Portfolio S&P 500 ETF (SPLG A-), the cheapest on the market, at just two basis points. So there’s still that cost consciousness really going on there,” Chang said.

Vanguard made headlines yesterday for cutting fees on over 80 funds. 

“This is another monumental fee cut ahead of Vanguard’s 50th anniversary this year,” Chang said. “Jack Bogle was famous for lowering the barrier to entry. He always used to say, ‘In investing, you get what you don’t pay for.’ So it’s heartening to see Vanguard continue to carry out its legacy of that low-cost, client-first investing.”

Vanguard has done more than 2,000 fee cuts since it was first founded back in 1975, Chang said. Over the past decade, Vanguard’s lower cost active fixed income funds have done particularly well in outperforming peers, which they attribute largely to the lower average fees. 

“I think average fees for Vanguard active fixed income are around 10 basis points, I want to say, versus the industry average that’s closer to 50,” Chang added. “So I have no doubt this move will further cement the company’s dominance in the asset management space and continue to strengthen its reputation for stability and client service.”

See more: Vanguard Slashes Fees on Over 80 Funds

A number of ETFs jumped out to Chang during the first month of the year.

Chang noted the strong showing from Capital Group with their Dividend Value ETF (CGDV A), which is to be expected. The iShares U.S. Equity Factor Rotation Active ETF (DYNF A-) is another notable fund this year, per Chang. Additionally, JPMorgan continues to crush it with their downside protection covered call ETFs, like the JPMorgan Equity Premium Income Fund (JEPI A) and the JPMorgan NASDAQ Equity Premium Income ETF (JEPQ A+).

Avantis, which is owned by American Century, is doing well, but remains especially well positioned in a year like this, according to Chang. “Investors aren’t sure how much more upside they’re going to get, coming off two straight years of 20%-plus gains for the S&P 500,” Chang said. “Many investors are expecting markets to take kind of a breather here, depending on what happens with tariffs and all that.”

“But even if the market goes up five to 10%, you’re still collecting those precious premiums with those covered call ETFs. So I think we’re going to continue to see those strategies develop and take root here,” Chang added.

$20 billion Stone Ridge Asset Management converted a lineup of mutual funds into ETFs in September 2024. The firm has since launched several additional ETFs, growing the lineup to 40 ETFs. The funds convert nest egg assets into predictable monthly distributions through a specified end year.

Using the Stone Ridge 2050 Longevity Income ETF (LFAI ) as an example, Conrad stepped through the structure of LifeX ETFs. LFAI provides a monthly distribution every single month from now until the end of 2050.

“Let’s say you buy one share to keep things really simple," Conrad said. "It’s designed to give you $1 per share per year in distributions in the early years. And then it’s going to give you about 75 cents per share per year in the last 20 years. So if you bought that today, the goal would be $1 a share per year until the year 2030, and then from 2031 through 2050, the last 20 years, $0.75 a share.”

An individual who plans to spend $100,000 per year would then buy 100,000 shares. That would give them $100,000 a year in the early years, and then $75,000 a year in the later years. 

“The reason we designed it to be a little higher up front, a little bit lower later on, is that most people in retirement tend to spend a little bit more money in their 60s and 70s. They’re in better health, they travel more, and things like that,” Conrad said.

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