U.S. ETF Monthly Summary: January 2025

U.S.-listed ETFs totaled $10.8 trillion in total assets under management at the end of January. The month saw ETF inflows of $105.5 billion, with equities still taking the lion’s share. Fixed-income funds experienced a huge increase, gaining 105% more than last month. In addition, 74 ETFs listed by month-end, down from the 100 launches in December.

Fund Flows by Asset Class

U.S. listed ETF flows (in millions) as of January 31, 2025

Total inflows for January were $105.5 billion, a 29% decrease from December’s total. Looking at ETF flows by asset class:

• By January month-end, inflows to equity ETFs decreased 49% from a stronger December, to $63 billion.

• Compared to the previous month, inflows for fixed income ETFs doubled to $38 billion in January, a slight increase from the same month in 2024.

• Amid talks and plans for tariffs under the Trump administration, investors showed little interest in commodity funds, draining $809 million in December.

Fund Flows by Sector

Sector flows seem to follow the change in administration, with financials and real estate attracting a huge portion of the new assets in January. Energy and basic materials experienced outflows.

ETF Launches

January saw 74 U.S. ETF launches, 26% less than December but more than the 63 ETFs from January 2024.

• A majority of the new ETFs (64) are actively managed, a trend we have seen more in recent years.

• There were 55 new equity ETFs in January, down from 70 last year.

• In fixed income, 15 ETFs launched in January, half from Stone Ridge with its long-term Treasury and inflation-linked bond funds.

• Toroso continued to launch single-stock ETFs and fund-of-funds through its YieldMax ETFs.

• The start of the year continues the trend of ETFs employing a covered call strategy to generate more income.

By the Way

This month we highlight ESG funds. Sustainable investing gained popularity in recent years, especially during the COVID-19 pandemic. ESG, or principles-based investing, prioritizes environmental, social, and corporate governance issues. Five years on, many investors and issuers are cautious of the strategy.

Support seems to have waned since 2023. We have seen just over a dozen ETFs dropping ESG from its name and, in some cases, even delisting. 

We have seen fewer ESG fund launches and lower flows to sustainable-themed funds since 2021. Perhaps it’s the novelty wearing off after the initial excitement; or the level of controversies that have discouraged investors.

The following is a review of recent and upcoming changes:

• Thrivent dropped ESG from the name and changed the strategy for its Small-Mid Cap Equity ETF (TSME).

• Deutsche Bank has seven funds distancing themselves from the acronym, switching instead to “scored and screened.” One such fund, the Xtrackers MSCI USA ESG Leaders Equity ETF (USSG), shed half its assets, with an outflow of $405 million last month.

• State Street will make a similar modification to two funds: SPDR S&P 500 ESG ETF (EFIV) and SPDR S&P SmallCap 600 ESG ETF (ESIX).

• New York Life will drop the reference from the NYLI MacKay ESG High Income ETF (IQHI).

• AXS Investments plans to merge Change Finance ESG ETF (CHGX) with Stance Sustainable Beta ETF (STSB).

• Mirae/Global X will cut its losses by delisting Global X S&P 500 ESG Covered Call ETF (XYLE) and Global X Nasdaq 100 ESG Covered Call ETF (QYLE).

Although rebounding in the last quarter of 2024, ESG flows have not gone back to the level of 2021. However, there is a demand for ESG funds. Responsible investing may evolve to meet the new demands of certain kinds of investors, and issuers may take steps to address their concerns. Perhaps investors seeking sustainable investments may go to specific funds with more targeted approaches aligned with their values, such as thematic funds.

This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.