May 29, 10:13 AM

U.S. Equity ETFs See Sector Rotations With Vanguard SPX $20.1B Inflow, $SOXX $750M Outflows and Retail Buying in May 2025

In May 2025, U.S. equity ETFs experienced notable shifts in investor flows, reflecting sector rotations and changing market sentiment. The largest inflows were observed in the Energy and Telecommunications sectors, as well as in Investment Grade and Treasury bond ETFs, while Large Cap and Health Care sectors faced outflows. Over the past week, ETFs such as $QQQ saw inflows of $2.6 billion, whereas $SPY, $TQQQ, $IWM, and $RSP recorded outflows ranging from $1.2 billion to $2.3 billion. The US semiconductors ETF $SOXX recorded approximately $750 million in net outflows in May, marking its largest monthly outflow since February. Vanguard's SPX ETF reported a record $20.1 billion inflow in April, contributing to year-to-date inflows of $65 billion as of May 21, positioning it to surpass the 2024 full-year inflow record of $116 billion. Despite these inflows, large-cap equity ETFs saw substantial outflows in the past week, with aggregate bonds and government bond ETFs attracting the majority of inflows. Institutional investors, including hedge funds and other institutions, sold approximately $3.5 billion in stocks over the past four weeks, the largest single-day sell-off since the 2022 bear market, while retail investors purchased nearly $2 billion, setting a new record. In April, $74 billion exited equity mutual funds and ETFs, yet retail investors' buying contributed to the fastest recovery in the S&P 500 index since 1982.