Global ETF Flows on September 16, 2025: A Tale of Divergence and Momentum

Global ETF Flows on September 16, 2025: A Tale of Divergence and Momentum

The global ETF landscape on September 16, 2025, revealed a striking duality: while U.S. equity ETFs as a category faced net outflows of $1.2 billion, granular data exposed sharp divergences within the sector. This divergence, coupled with robust inflows into international equities and fixed income, underscores a broader shift in investor sentiment toward diversification and defensive positioning.

U.S. Equities: A Tale of Two ETFs

U.S. equity ETFs experienced a paradoxical split. Large-cap benchmarks like the SPDR S&P 500 ETF Trust (SPY) and iShares Core S&P 500 ETF (IVV) saw massive redemptions of $3.3 billion and $4.9 billion, respectivelyETF Daily Flows: U.S. Equity Sees Outflows While International and Fixed Income Gain^[5], reflecting a pullback from mega-cap dominance. Meanwhile, the Vanguard S&P 500 ETF (VOO) attracted $1.78 billion in inflowsTop ETFs to Watch in 2025: Flows and AUM Trends - Global Finserve^[4], and the Invesco NASDAQ 100 ETF (QQQM) gained $1.65 billionTop ETFs to Watch in 2025: Flows and AUM Trends - Global Finserve^[4]. This suggests a rotation within U.S. equities, with investors favoring specific funds over broad market exposure.

The Invesco QQQ Trust (QQQ), a tech-heavy ETF, faced $2.93 billion in outflowsTop ETFs to Watch in 2025: Flows and AUM Trends - Global Finserve^[4], signaling a retreat from speculative growth stocks. This aligns with broader momentum trends: the Technology Select Sector SPDR (XLK) gained 0.28% for the weekETF Data Watch: Asset Flows Monitor September 2025 Edition^[1], but its underlying ETFs (e.g., QQQ) faced redemption pressure. The disconnect highlights a tug-of-war between AI-driven optimism and valuation concerns.

International Equities and Fixed Income: Safe Havens in a Volatile Climate

Investors increasingly sought diversification beyond U.S. borders. International equity ETFs saw $1.9 billion in net inflows, a reversal from earlier 2025 trends where U.S. equities dominatedETF Daily Flows: U.S. Equity Sees Outflows While International and Fixed Income Gain^[5]. This shift coincides with the U.S. dollar's weakening and BlackRock's observation that over half of its clients are prioritizing alternatives like commodities and digital assets2025 Fall Investment Directions | BlackRock^[2].

Fixed income ETFs also attracted $1.7 billion in inflows, driven by funds like iShares 20+ Year Treasury Bond ETF (TLT) and LQDETF Daily Flows: U.S. Equity Sees Outflows While International and Fixed Income Gain^[5]. This reflects a risk-off posture amid macroeconomic uncertainty, with investors hedging against potential rate cuts or inflationary surprises.

Commodities: A Correction in Precious Metals

Commodities ETFs faced a mixed week. While the sector had attracted $4.9 billion in August 2025ETF Data Watch: Asset Flows Monitor September 2025 Edition^[1], September 16 saw $280 million in outflows, led by gold ETFs like SPDR Gold Shares (GLD), which lost $367.6 millionETF Daily Flows: U.S. Equity Sees Outflows While International and Fixed Income Gain^[5]. This correction may reflect profit-taking after a summer rally, though BlackRock's emphasis on commodities as a diversification tool suggests long-term interest remains intact2025 Fall Investment Directions | BlackRock^[2].

Sectoral Momentum: Energy and Industrials Outperform

Sectoral momentum data for the week of September 16 revealed a clear tilt toward economically sensitive sectors. The Energy Select Sector SPDR (XLE) and Industrials Select Sector SPDR (XLI) gained 0.32% and 0.28%, respectivelyETF Data Watch: Asset Flows Monitor September 2025 Edition^[1], while Utilities (XLU) and Health Care (XLV) lagged. This aligns with a broader rotation into sectors poised to benefit from AI-driven industrial demand and energy transition trends.

The MSCI Momentum ETF's outperformance of the S&P 500 further underscores this trendMarket In A Minute September 16, 2025^[3], indicating that investors are increasingly favoring momentum names over the broader market—a classic late-bull-cycle signal.

Implications for Investors

The September 16 flows highlight three key themes:
1. Diversification Over Concentration: The shift from U.S. large-cap dominance to international equities and fixed income suggests investors are hedging against dollar volatility and AI-driven market concentration.
2. Sector Rotation: Energy and industrials are gaining traction, while tech faces profit-taking. This mirrors historical bull-market rotations toward cyclical sectors.
3. Defensive Positioning: Fixed income inflows and gold corrections indicate a cautious stance, with investors balancing growth bets against macro risks.

For investors, the takeaway is clear: a diversified portfolio with exposure to international equities, energy, and fixed income—while hedging against tech overvaluation—may be optimal in this environment.