Surfing the Wave: Active ETF Flows Shine in a Buoyant Summer for Investments


While the stock market experienced fluctuations during the third quarter (Q3), Exchange-Traded Funds (ETFs) continued to make waves with a robust $107 billion in net quarterly flows. This impressive figure nearly matched Q2’s performance, signifying a strong rebound after a slow start to the year. These steady flows have positioned ETFs to potentially yield significant annual returns, with Year-to-Date (YTD) net flows standing at $328 billion. In this blog post, we will delve into the most notable trends in ETF flows during the summer and explore how active ETFs are making a significant impact on the investment landscape.

Active ETFs Take Center Stage

One of the standout trends in ETF flows during Q3 is the remarkable momentum behind actively managed ETFs. These are ETFs designed to outperform a benchmark index, and they have gathered a staggering $82 billion, accounting for 25% of total net flows for the year—an all-time annual record for this category. During Q3 alone, active ETFs accumulated $31 billion, comprising 29% of the overall Q3 ETF flows.

Despite this impressive growth, active ETFs still represent just 6% of total ETF assets under management, amounting to $439 billion. This suggests that there is ample room for active ETFs to expand their presence in the market. To meet the growing demand for these funds, approximately 80% of the 146 new ETFs launched in Q3 were actively managed.

Surfing the Wave: Active ETF Flows Shine in a Buoyant Summer for Investments

The surge in active ETFs has not only been a boon for this specific category but has also contributed to increased flows into equity ETFs, which are predominantly composed of stock ETFs. After a record-setting Q4 in 2022, equity ETF flows saw a decline in Q1 2023. However, they have shown resilience over the past six months, hinting at the impact of active management on investor sentiment.

Sector-Wise Insights

Surfing the Wave: Active ETF Flows Shine in a Buoyant Summer for Investments

Among the 11 stock market sectors, Q3 saw net flows for cyclical-sector-focused ETFs generally outperforming defensive sector ETFs. The surge in oil prices over the summer translated into increased demand for energy sector ETFs. Interestingly, energy ETFs experienced inflows after sizable outflows in four of the last five quarters, with a net inflow of $2 billion. The consumer discretionary sector also attracted $2 billion in inflows, while the technology sector garnered $2 billion. In contrast, health care (-$3 billion), financials (-$2 billion), and consumer staples (-$2 billion) led in outflows.

Bond ETF Flows in Decline

Surfing the Wave: Active ETF Flows Shine in a Buoyant Summer for Investments

A recurring trend over multiple quarters has been the steady decrease in demand for fixed income ETFs, which primarily consist of bond ETFs. While bond ETF flows remain positive, they have declined for three consecutive quarters, reaching a multi-year low in Q3.

Government bond ETFs have been the dominant force in this category’s flows year-to-date. Fluctuations in corporate bond ETF flows, with outflows in Q1 and Q3 and healthy inflows in Q2, have resulted in subdued flows for this category thus far in the year.

Investing in ETFs

If you’re considering entering the world of ETF investing, it’s crucial to focus on your specific objectives and risk constraints rather than blindly following trends in ETF flows. One valuable tool to assist you in your ETF selection process is Fidelity’s ETF Screener. This tool allows you to filter ETFs based on various characteristics, such as the fund’s objectives, fundamentals, technicals, performance, volatility, trading characteristics, tax considerations, and analyst ratings. Using such tools can help you make informed investment decisions aligned with your financial goals.


Q3 has been marked by resilient ETF flows, with a notable rise in active ETFs, outperforming stocks in terms of net inflows. As the investment landscape continues to evolve, it is essential for investors to remain diligent in their research and select ETFs that align with their specific financial objectives and risk tolerance. While ETF flows can offer valuable insights into market sentiment, individual investors must base their decisions on a well-thought-out investment strategy. Whether you choose active or passive management, ETFs offer a diverse array of investment options to suit a wide range of investment goals.,This article is an original creation by If you wish to repost or share, please include an attribution to the source and provide a link to the original article.Post Link:

Like (1)
Previous October 18, 2023 2:38 pm
Next October 20, 2023 12:41 pm

Related Posts

  • Seizing Investment Opportunities in AI and Technology: Top 5 Technology ETFs

    Artificial Intelligence (AI) and technology have become two of the most transformative forces of our time, permeating almost every sector of the economy. As such, they present a unique investment opportunity for those interested in the capital market. There are numerous Exchange Traded Funds (ETFs) that provide access to these sectors. Here, we will delve into five of the most prominent Technology ETFs: Vanguard Information Technology Index Fund (VGT); Technology Select Sector SPDR Fund (XLK); iShares Semiconductor ETF (SOXX); Global X Artificial Intelligence & Technology ETF (AIQ) and Robo Global…

    June 6, 2023
  • Investing in the Future: An Introduction to AI-Focused ETFs

    AI-focused ETFs, or exchange-traded funds, are investment funds that primarily invest in companies that specialize in artificial intelligence technologies. These ETFs offer investors exposure to the rapidly growing field of AI, which is expected to have a significant impact on many industries in the coming years. In this article, we’ll explore the basics of AI-focused ETFs and what investors should consider before investing in them. What are AI-Focused ETFs? AI-focused ETFs are investment funds that invest in companies that are focused on artificial intelligence technologies. These companies may be involved…

    February 17, 2023
  • Top 3 Inflation-Protected TIPS ETFs That Have Shown Strong Performance

    Treasury Inflation-Protected Securities (TIPS) are a type of government-issued bond that provides protection against inflation. The value of TIPS increases with inflation and decreases with deflation, which means that their principal value is adjusted according to changes in the Consumer Price Index (CPI). This makes TIPS a popular investment choice for those who are seeking to hedge against inflation and preserve their purchasing power. TIPS are issued by the U.S. Department of the Treasury and are backed by the full faith and credit of the U.S. government. They have a…

    February 11, 2023
  • BlackRock’s iShares Bitcoin Trust: A Game-Changer for Bitcoin Liquidity and Institutional Adoption?

    BlackRock’s recent move to file for a spot Bitcoin exchange-traded fund (ETF) with the U.S. Securities and Exchange Commission (SEC) has stirred significant interest in the financial world. This proposed fund, dubbed the iShares Bitcoin Trust, is set to operate like a trust, much like how the SPDR Gold Shares ETF functions. Its unique structure would allow for daily creations and redemptions, mimicking an ETF’s operations. Notably, there has been a level of disquiet in the market regarding the use of the term “trust” for publicly-traded Bitcoin instruments. Grayscale’s Bitcoin…

    June 21, 2023
  • Exploring Dividend ETFs and How to Choose the Best Fit for Your Investment Goals

    What Is a Dividend ETF? A dividend ETF is an exchange-traded fund that invests in stocks that pay dividends, which are regular payments made by a company to its shareholders from its profits. These funds provide investors with a way to earn regular income while also diversifying their portfolio. Dividend ETFs can be categorized by the types of dividend stocks they invest in, such as high dividend ETFs, dividend REIT ETFs, dividend growth ETFs, dividend aristocrat ETFs, and international high dividend ETFs. When choosing a dividend ETF, investors should consider…

    February 12, 2023
  • Unlocking the Potential of ETFs: 5 Key Insights for Investors

    Exchange-traded funds (ETFs) have revolutionized the investment landscape, offering investors a versatile and cost-effective way to access a wide range of assets. In this blog post, we’ll explore five essential aspects of ETFs that every investor should be aware of. 1. Not All ETFs are Created Equal One of the key attractions of ETFs is their cost-effectiveness. ETFs typically have lower expense ratios compared to traditional mutual funds. However, it’s crucial to note that not all ETFs are equally cheap. While many ETFs offer competitive expense ratios, some may be…

    September 29, 2023
  • Unveiling the Future of Investment – Cathie Wood’s ARK Investment Management and Its Innovative Funds

    Introduction In the world of finance and investment, few names have generated as much buzz in recent years as Cathie Wood and her firm, ARK Investment Management. As the founder, CEO, and CIO of ARK, Wood has disrupted the traditional investment landscape with her focus on disruptive innovation and high-growth potential. This blog post will introduce you to ARK Investment Management and its innovative funds, including ARKK, ARKW, ARKQ, ARKX, ARKG, and ARKF. ARK Investment Management: A Brief Overview Founded in 2014, ARK Investment Management is an investment management firm…

    March 22, 2023
  • Harnessing the AI Revolution: A Guide to the Top 4 AI ETFs for Future-Focused Investors

    Introduction The rapid advancements in artificial intelligence (AI) and its increasing influence on various industries have made it an attractive investment opportunity for many. As AI continues to revolutionize the way businesses operate, it presents a significant potential for growth and profitability. One way to gain exposure to this booming sector is through AI-focused exchange-traded funds (ETFs). In this blog post, we’ll introduce you to AI ETFs and explore the top four funds to consider for your investment portfolio. Understanding AI ETFs What are AI ETFs? AI ETFs are exchange-traded…

    April 6, 2023
  • Top Dividend ETFs: A Comprehensive Guide to High-Yield Investing

    Dividend ETFs, or exchange-traded funds, are investment vehicles that provide investors with exposure to a diversified portfolio of dividend-paying stocks. These ETFs are designed to track the performance of an underlying index, which comprises a basket of high-quality, high-dividend-yielding stocks. The goal of dividend ETFs is to provide investors with a steady stream of income, along with the potential for capital appreciation. In this blog post, we will explore the top dividend ETFs that cater to various investment objectives and risk profiles. What is a Dividend ETF? A dividend ETF…

    May 2, 2023
  • Exploring the Advantages and Disadvantages of Single-Stock ETFs: A Comprehensive Guide

    Single-Stock ETF (Exchange-Traded Fund) is a type of ETF that holds shares of a single company rather than a basket of companies. A single-stock ETF is similar to an individual stock in that it is traded on an exchange and its price fluctuates based on supply and demand. However, unlike an individual stock, a single-stock ETF is managed by a professional fund manager who decides which shares to buy and sell, and it can be bought and sold like any other ETF. Single-stock ETFs provide investors with an easy and…

    January 24, 2023

Leave a Reply

Your email address will not be published. Required fields are marked *