ETF Flows Surge in August, Bond ETFs Set Monthly Record Amid Interest Rate Cut Speculation

Bond ETFs saw a record $43 bln inflows in August, driven by taxable-bond ETFs, while US small-cap stock ETFs experienced their first inflows since January. US stock ETF inflows were choppy but ended strong at $39 bln. Federal Reserve Chair Jerome Powell's comments on rate cuts led to increased interest in shorter and intermediate-term bonds.

August 2025 saw a significant shift in ETF inflows, with bond ETFs drawing record inflows of $43 billion, according to the latest data from FactSet [1]. This surge was driven primarily by taxable-bond ETFs, which benefited from increased investor interest in shorter and intermediate-term bonds following Federal Reserve Chair Jerome Powell's comments on potential rate cuts [2].

US stock ETF inflows, while choppy throughout the month, ended strong at $39 billion. This figure is notable for the first inflows in US small-cap stock ETFs since January, suggesting a renewed interest in smaller companies [3]. The Vanguard S&P 500 ETF (VOO) and the iShares Core S&P 500 ETF (IVV) remained top performers, with $9.2 billion and $7.9 billion in inflows, respectively [3].

The Vanguard Short-Term Corporate Bond ETF (VCSH) and the iShares 0-3 Month Treasury Bond ETF (SGOV) were among the biggest winners in the bond ETF category, drawing $4.15 billion and $3.85 billion, respectively [3]. The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) also saw substantial inflows, pulling in nearly $3 billion [3]. These inflows reflect investors' increased appetite for safe-haven assets and the tightening of investment-grade spreads [2].

The SPDR Gold Shares (GLD) also saw significant inflows, with $2.6 billion added to the fund as gold flirted with record highs near $3,500. The attempted firing of Fed Governor Lisa Cook by President Trump added to safe-haven demand [3].

The iShares Ethereum Trust ETF (ETHA) benefited from Ethereum's first new all-time high in four years, with $3.4 billion added to the fund during the month [3].

Overall, the data suggests that investors are increasingly looking to diversify their portfolios, with a focus on safe-haven assets and sectors that offer resilience in uncertain economic conditions.

References:
[1] https://www.etf.com/sections/monthly-etf-flows/etfs-pull-1193b-august-highest-monthly-total-2025
[2] https://www.ainvest.com/news/assessing-impact-canada-july-2025-trade-deficit-currency-equity-markets-2509/
[3] https://www.etf.com/sections/monthly-etf-flows/etfs-pull-1193b-august-highest-monthly-total-2025