May 2025 was another month with healthy inflows for the U.S. ETF industry.
These inflows occurred in a volatile but overall positive market environment in which investors around the globe acted nervous over any political and economic news. Investor sentiment was still further impacted by the announcements around the new tariff regime by the U.S. president and potential tit-for-tat reactions from the markets which are the targets of the new tariffs. That said, the tariffs are seen as a kind of trade war between the U.S. and the rest of the world, especially China, by some market observers.
When it comes to this, investors were concerned about the impact of any new tariffs on the growth expectations of literally all economies around the globe. In addition to this, investors were also concerned about the impact of new tariffs on the profitability of all kinds of companies, as well as on the impact of tariffs on inflation around the globe.
Additionally, the increasing tensions in the Middle East did also impact investor sentiment, since a possible conflict between Israel and Iran has the potential to become a broader conflict in the region and may drive up the price for oil.
Meanwhile, central banks around the globe try to adjust their policies to the current environment. While the European Central Bank (ECB) is expected to further cut interest rates, the Bank of Japan (BoJ) may have to raise interest rates to fight inflation in Japan. Conversely, it is expected that the U.S. Federal Reserve will leave its interest rates unchanged for a longer period of time. These decisions reflect central banks’ efforts to navigate economic challenges, including trade tensions, inflationary trends, and the high market volatility, to support their local economies.
Nevertheless, fears of increasing debt in the U.S. and other major economies—which may lead to increasing interest rates—might be the reason why investors are not strong buyers of bond ETFs despite a possible need for safe haven investments. That said, the inflows into money market ETFs were down in May, which might be another sign that investors are rather in risk-on mode.
More generally speaking, aside from the (geo)political tensions, there is only a very limited number of indicators which are sending negative signals for economic growth in the U.S. and other major economies around the world. With regard to this, it is noteworthy that most of these negative indicators are being offset by positive signals from other indicators. Nevertheless, some major economies, such as Germany, lack economic growth and may need lower interest rates and/or increased government spending as stimulus. Despite these headwinds, the positive effects of lower interest rates seem to be more important for investors than the current state of some economies.
From an ETF industry perspective, the performance of the underlying markets led, in combination with the estimated net flows, to increasing assets under management (from €10,486.0 bn as of April 30, 2025, to €11,056.2 bn at the end of May). At a closer look, the increase in assets under management of €489.3 bn for May was driven by the performance of the underlying markets (+€570.2 bn), while estimated net inflows contributed €80.9 bn to the growth of the assets under management.
Assets Under Management by Asset Type
As for the overall structure of the U.S. ETF industry, it was not surprising equity ETFs ($8,688.1 bn) held the majority of assets, followed by bond ETFs ($1,954.5 bn), commodities ETFs ($211.4 bn), alternatives ETFs ($172.9 bn), mixed-assets ETFs ($28.9 bn), and money market ETFs ($0.3 bn).
With regard to the current market environment, it is still somewhat surprising that the assets under management for alternatives, bond, mixed assets, and money market ETFs marked an all-time high at the end of the month. These numbers show that the main headwinds for the assets under management are witnessed in the equity markets.
Graph 1: Market Share, Assets Under Management in the U.S. ETF Industry by Asset Type, May 31, 2025
Source: LSEG Lipper
ETF Flows by Asset Type
The U.S. ETF industry enjoyed healthy estimated net inflows (+$80.9 bn) over the course of May despite the headwinds in the equity markets. These inflows drove the overall inflows in ETFs up to $453.2 bn for the year 2025 so far.
Given the volatility on the equity markets, it is not surprising that the inflows in the U.S. ETF industry for May were driven by bond ETFs (+$38.6 bn), followed by equity ETFs (+$35.8 bn), alternatives ETFs (+$8.2 bn), mixed-assets ETFs (+$0.3 bn), and money market ETFs (+$0.1 bn), while commodities ETFs (-$1.9 bn) faced outflows.
The inflows into bond ETFs might be a sign that U.S. investors are looking for safe haven investments given the unclear outlook for future earnings caused by the pending announcement of the final tariff regime in the U.S.
Graph 2: Estimated Net Sales by Asset Type, May 2025 (USD Billions)
Source: LSEG Lipper
Assets Under Management by Lipper Global Classifications
In order to examine the U.S. ETF markets in further detail, a review of the Lipper global classifications will lead to more insights on the structure and concentration of assets within the U.S. ETF industry. At the end of May 2025, the U.S. ETF market was split into 139 different peer groups. The highest assets under management at the end of May were held by funds classified as Equity U.S. ($4,662.0 bn), followed by Equity Global ex U.S. ($861.0 bn), Equity U.S. Small & Mid Cap ($843.4 bn), Bond USD Medium Term ($495.5 bn), and Equity U.S. Income ($404.5 bn). These five peer groups accounted for 65.72% of the overall assets under management in the U.S. ETF segment, while the 10-top classifications by assets under management accounted for 77.01%.
Overall, 17 of the 139 peer groups each accounted for more than 1% of assets under management. In total, these 17 peer groups accounted for $9,531.2 bn, or 86.21%, of the overall assets under management.
Graph 3: Ten Largest Lipper Global Classifications by Assets Under Management, May 31, 2025 (USD Billions)
Source: LSEG Lipper
The peer groups on the other side of the table showed some funds in the U.S. ETF market are quite low in assets and their constituents may face the risk of being closed in the near future. They are obviously lacking investor interest and might, therefore, not be profitable for their respective fund promoters.
Graph 4: Ten Smallest Lipper Global Classifications by Assets Under Management, May 31, 2025 (USD Billions)
Source: LSEG Lipper
ETF Flows by Lipper Global Classifications
The net inflows of the 10 best-selling Lipper classifications accounted for $70.2 bn. In line with the overall sales trend for May, bond peer groups (+$31.9 bn) gathered the majority of flows by asset type on the table of the 10 best-selling classifications by estimated net inflows for May 2025. Given the overall fund flow trend in the U.S. ETF industry, it was somewhat surprising that Equity U.S. (+$15.6 bn) was the best-selling Lipper global classification for May. It was followed by Equity Global ex U.S. (+$9.5 bn) and Bond USD Government (+$7.3 bn).
The flows on classification level do show even better that U.S. investors seem to have further bought into U.S. large caps after the market turmoil in April, to participate from the market recovery.
Despite the fact that there are classifications from various asset types on the table of the 10 best-selling classifications, these numbers show that the U.S. ETF segment is highly concentrated when it comes to the estimated net flows by classification. Generally speaking, one would expect the flows into ETFs to be concentrated since investors often use ETFs to implement their market views and short-term asset allocation decisions. These products are made and, therefore, are easy to use for these purposes.
Graph 5: Ten Best- and Worst-Lipper Global Classifications by Estimated Net Sales, May 2025 (USD Billions)
Source: LSEG Lipper
On the other side of the table, the 10 classifications with the highest estimated net outflows for May faced lower outflows for May than those for April (-$33.6 bn), since these classifications accounted for $20.1 bn in outflows.
Alternative Equity Leveraged (-$10.1 bn) was the classification with the highest outflows for the month. It was bettered by Bond USD Government Short Term (-$3.9 bn), Equity Sector Financials (-$1.6 bn), Commodity Precious Metals (-$1.3 bn), and Equity Sector Materials (-$0.8 bn).
Assets Under Management by Promoters
A closer look at assets under management by promoters in the U.S. ETF industry also showed high concentration, with only 93 of the 405 ETF promoters in the U.S. ETF industry holding assets at or above $1.0 bn—accounting for $10.999.5 bn in assets under management. The largest ETF promoter in the U.S.—iShares ($3,341.6 bn)—accounted for 30.22% of the overall assets under management, ahead of the number-two promoter—Vanguard ($3,199.6 bn)—and the number-three promoter—SPDR ($1,530.0 bn).
Graph 6: The 10 Largest ETF Promoters by Assets Under Management, May 31, 2025 (USD Billions)
Source: LSEG Lipper
The 10-top promoters accounted for 90.17% of the overall assets under management in the U.S. ETF industry. This meant, in turn, the other 395 fund promoters registering at least one ETF for sale in the U.S. accounted for only 9.83% of the overall assets under management. With regard to the concentration of the U.S. ETF industry by promoter, it is noteworthy that there were nine ETF promoters accounting for more than 1% of the overall assets under management each.
ETF Flows by Promoters
Since the U.S. ETF market is highly concentrated with regard to the assets under management by promoter, it was not surprising that six of the 10 largest promoters by assets under management were among the 10-top selling ETF promoters for May. iShares was the best-selling ETF promoter in the U.S. for May (+$24.3 bn), ahead of Vanguard (+$22.1 bn) and Invesco (+$12.8 bn).
Graph 7: Ten Best-Selling ETF Promoters, May 2025 (USD Billions)
Source: LSEG Lipper
The flows of the 10-top promoters accounted for estimated net inflows of $79.5 bn. As for the overall flow trend in May, it was clear that some of the 405 promoters (94) faced estimated net outflows (-$17.1 bn in total) over the course of the month.
Assets Under Management by ETFs
There were 4,245 instruments (primary share classes/portfolios [4,176] and [convenience] share classes [69]) listed as ETFs in the Lipper database at the end of May. Regarding the overall market pattern, it was not surprising assets under management at the ETF level were also highly concentrated. Only 788 of the 4,176 ETFs (primary share classes = portfolios) held assets above $1.0 bn each. These ETFs accounted for $10,510.5 bn, or 95.06%, of the overall assets in the U.S. ETF industry. The 10 largest ETFs in the U.S. accounted for $3,372.8 bn, or 30.51%, of the overall assets under management.
Graph 8: The 10 Largest ETFs by Assets Under Management, May 31, 2025 (USD Billions)
Source: LSEG Lipper
Estimated Net Flows at the ETF Level
A total of 2,025 of the 4,176 ETFs (primary share classes = portfolios) analyzed in this report showed net inflows of more than $10,000 each for May, accounting for inflows of $168.1 bn. This meant the other 2,151 ETFs faced no flows, or net outflows, for the month. Upon closer inspection, 285 of the 1,906 ETFs posting net inflows enjoyed inflows of more than $100 m during May—for a total of $143.4 bn. The best-selling ETF for May was Vanguard 500 Index Fund;ETF, which enjoyed estimated net inflows of $10.6 bn. It was followed by Invesco QQQ Trust Series 1 (+$7.1 bn) and iShares Bitcoin Trust ETF (+$6.7 bn).
Graph 9: The 10 Best-Selling ETFs, May 2025 (USD Billions)
Source: LSEG Lipper
The flow pattern at the fund level indicated there was a lot of turnover and rotation during May, but it also showed the concentration of the U.S. ETF industry even better than the statistics at the promoter or classification levels since the 10 best-selling ETFs account for inflows of $47.1 bn.
Given its size and the overall trend for net sales at the promoter level, it was not surprising that seven of the 10 best-selling funds for May were promoted by iShares. These iShares ETFs accounted for estimated net inflows of $27.0 bn.
This article is for information purposes only and does not constitute any investment advice.
The views expressed are the views of the author, not necessarily those of Lipper or LSEG.
