Over the past few months, geopolitical uncertainty has dominated the market. How was your ETF activity during this volatility? And what is the biggest trend that forms today’s ETF space?
ETF flows began in 2025 in a strong coincidence with all-time highs on the S&P 500 and NASDAQ, but in April it marked a slowdown as market volatility increased and geopolitical uncertainty weighed on investors’ sentiment. Recent data shows that US ETFs raised about $36 billion in April. This is the lowest monthly total since August 2023. It’s not surprising. It’s not surprising. This earns relatively more profits than equity ETFs due to the risk of sentiment in April, bond ETF flows, particularly the short-term US Treasury ETFs.
Despite the April pullback, the overall broader trend is clear. The rise in volatility continues to direct investors towards ETFs. However, the nature of this demand has evolved. More investors are no longer simply looking for low-cost, broad market exposure. They are increasingly looking for specific market solutions such as protection, income, and theme strategies. This change is evident in the continued strong flow of buffer and target revenue ETF strategies last month, even if the overall flow has tapered. As market conditions remain uncertain, ETFs can become an essential building block for not only exposure to specific assets, but also for proactively managing risk and generating returns in challenging environments.
With this widespread uncertainty, how can investors use ETFs to mitigate risks in this market environment?
During these broader uncertainty periods, ETFs offer investors a flexible and efficient way to mitigate risk without the need to overhaul the entire portfolio. One of the most effective approaches in the stock market is the use of buffered ETFs. It aims to cushion the negative side while participating in market evaluations. These strategies gain traction due to their ability to keep their clients invested in the market, even during periods of extreme volatility. In these times, selling is fascinating, but history shows that even some of the recovery can dramatically alter long-term returns.
Meanwhile, target income ETFs are also gaining traction as investors prioritize stable cash flows over uncertain long-term profits. These ETFs are typically designed to generate attractive monthly or quarterly revenue streams by combining high-delivery stocks, covered call strategies, or bond exposures. Target revenue ETFs not only provide diversification, but also support anchor portfolios with more predictable income.
In addition to developing tariffs, which news headlines do you monitor?
Beyond the announcement of new trade deals and ongoing negotiation headlines, our focus is totally on how the administration’s economic policies are affecting difficult economic data. Until now, the market only had soft data like consumer trust, which has plunged to its lowest level in five years, measuring the potential impact of the imminent trade war. However, the latest release of first quarter GDP, which was signed at 0.3%, provided the first harsh evidence of economic tensions marking the worst printable in three years.
Attention is currently being focused on key indicators going forward, such as non-farm pay, CPI and corporate revenue. These challenging economic signals also play a more important role in the decision-making of the Federal Reserve. If unemployment rates continue to deteriorate in economic degradation, the Fed could be forced to relax its monetary policy, regardless of whether inflationary pressures continue. Interest rate cuts will not lower prices or bring items back to the shelves, but it could signal the market that the Fed is closely monitoring the economy.
