The global financial markets were shaped by a sharp shift in macroeconomic narratives, driven primarily by geopolitical tensions, energy price volatility, and an increasingly fragmented monetary policy landscape over the course of Q1 2026.
Bond markets reflected a transition from the synchronized easing expectations of late 2025 to a more uncertain environment. In March rising oil prices, linked to renewed geopolitical tensions in the Middle East, pushed inflation expectations higher and challenged the disinflation trend. Within this environment, central bank policies were back in the focus of investors.
Looking more closely, Q1 2026 marked a clear divergence among major institutions. The Federal Reserve maintained a cautious “wait-and-see” stance, holding rates steady as it balanced moderating inflation against geopolitical risks and energy-driven price pressures. Similarly, the European Central Bank kept rates unchanged, signalling flexibility but refraining from further easing amid rising inflation linked to energy costs. The Bank of England also paused, with policymakers highlighting the inflationary impact of the energy shock and even reopening the discussion around potential tightening.
In contrast, the Bank of Japan stood out by maintaining a tightening bias after its earlier policy shift, reflecting stronger domestic inflation dynamics and a gradual exit from ultra-loose policy.
At the same time, structurally higher yields continued to attract investors back into fixed income as an asset class, with bonds regaining their role as a source of income and diversification.
Equity markets experienced notable sector rotation rather than a uniform trend over the course of Q1 2026. Energy stocks outperformed amid the surge in oil prices, while rate-sensitive sectors such as technology came under pressure as expectations for rapid monetary easing were pushed back. This rotation reflected a broader repricing of inflation and interest rate trajectories, as well as persistent uncertainty about global growth. Nevertheless, the overall trend in corporate earnings during Q1 2026 can be characterised as solid but uneven growth, with a clear divergence across sectors and regions, and increasing sensitivity to macroeconomic and geopolitical conditions. At an aggregate level, measured by the S&P 500 companies, earnings growth remained resilient, as companies are expected to deliver low double-digit year-on-year earnings growth. This indicates that, despite macro uncertainty, corporate profitability continued to expand and exceeded (partly) earlier expectations.
Overall, Q1 2026 was characterised by a move from policy synchronisation to divergence, from disinflation optimism to renewed inflation uncertainty, and from broad-based equity gains to more selective market leadership. These dynamics underline a more complex investment environment in which geopolitical developments and central bank policies remain central to investor confidence and market direction.
Assets Under Management in the U.S. ETF Industry
From a U.S. ETF industry perspective, the performance of the underlying markets led, in combination with the estimated net flows, to increasing assets under management (from $13,475.2 bn as of December 31, 2025, to $13,651.1 bn at the end of March 2026). At a closer look, the increase in assets under management of $175.9 bn for Q1 2026 was driven by estimated net inflows (+$461.8 bn), while the performance of the underlying markets (-$285.9 bn) had a negative impact on the assets under management.
Graph 1: Change in Assets Under Management in the U.S. ETF Industry by Asset Type, December 31, 2025 – March 31, 2026 (in bn USD)
Source: LSEG Lipper
As for the overall structure of the U.S. ETF industry, it was not surprising equity ETFs ($10,318.0 bn) held the majority of assets, followed by bond ETFs ($2,409.8 bn), alternatives ETFs ($496.9 bn), commodities ETFs ($365.5 bn), mixed-assets ETFs ($32.9 bn), and money market ETFs ($28.1 bn).
Graph 2: Market Share, Assets Under Management in the U.S. ETF Industry by Asset Type, March 31, 2026
Source: LSEG Lipper
Given the volatile and mainly negative market environment over the course of the month, it is no surprise that the overall assets under management in the U.S. ETF industry didn’t hit a new (month end) all-time high at the end of March 2026. Conversely, it is noteworthy that the assets under management for all bond ETFs and money market ETFs reached a new (month end) all-time high at the end of March.
ETF Flows by Asset Type
The U.S. ETF industry saw strong inflows (+$461.8 bn) over the course of Q1 2026. The flow pattern over the course of the first quarter shows that the inflows into ETFs slowed down as the geopolitical tensions in the Middle East intensified over the course of March.
Graph 3: Monthly Estimated Net Sales, January 1, 2026 – March 31, 2026 (USD Billions)
Source: LSEG Lipper
These impressive estimated net flows for January (+$158.0 bn) and February (+$191.0 bn) might be seen as proof that the acceptance and adoption of ETFs by U.S. investors has been further increased over the course of Q1 2026.
The inflows in the U.S. ETF industry for Q1 2026 (+$461.8 bn overall) were driven by equity ETFs (+$260.5 bn), followed by bond ETFs (+$148.5 bn), alternatives ETFs (+$24.7 bn), money market ETFs (+$22.6 bn), mixed-assets ETFs (+$3.2 bn), and commodities ETFs (+$2.5 bn).
Graph 4: Estimated Net Sales by Asset Type, January 1 – March 31, 2026 (USD Billions)
Source: LSEG Lipper
Given the market environment, it was somewhat surprising to see that equity ETFs enjoyed the highest estimated net inflows over the course of March. That said, money market ETFs saw lower than expected estimated net inflows despite their status as safe-haven products. Nevertheless, the inflows into money market products might be a sign that some U.S. investors have started to put some money on the sidelines as a risk-off move in an environment with increasing geopolitical tensions.
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 March 2026, the U.S. ETF market was split into 136 different Lipper global classifications. The highest assets under management at the end of March were held by funds classified as Equity U.S. ($5,557.8 bn), followed by Equity Global ex U.S. ($1,117.3 bn), Equity U.S. Small & Mid Cap ($1,005.2 bn), Bond USD Medium Term ($615.1 bn), and Equity U.S. Income ($493.1 bn). These five classifications accounted for 64.38% of the overall assets under management in the U.S. ETF segment, while the 10-top classifications by assets under management accounted for 76.72%.
Overall, 15 of the 136 peer groups each accounted for more than 1% of assets under management. In total, these 15 peer groups accounted for $11,438.0 bn, or 83.79%, of the overall assets under management.
Graph 5: Ten Largest Lipper Global Classifications by Assets Under Management, March 31, 2026 (USD Billions)
Source: LSEG Lipper
In addition, it was noteworthy that the rankings of the largest classifications saw some movement in single positions over the last few years. As the positions of the classifications had been quite stable in the past, this indicates that U.S. investors use ETFs to trade according to their market views. Even as some of these positions might be core holdings, once investors got into risk-off mode they also reduced their exposure to core asset classes.
Despite the fact that the rankings at the top of the table show some changes from time to time, these numbers show that the assets under management by Lipper global classifications continued to be highly concentrated in the U.S. ETF industry.
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 6: Ten Smallest Lipper Global Classifications by Assets Under Management, March 31, 2026 (USD Billions)
Source: LSEG Lipper
ETF Flows by Lipper Global Classifications
The net inflows of the 10 best-selling Lipper classifications accounted for $317.5 bn. In line with the overall sales trend for Q1 2026, equity peer groups (+$183.3 bn) led the flows by asset type on the table of the 10 best-selling Lipper global classifications by estimated net inflows. That said, it was somewhat surprising to see only five equity classifications on the table of the 10 best-selling classifications for the month given the overall fund flow trend. As to be expected, Equity U.S. (+$61.7 bn) was the best-selling Lipper global classification for Q1 2026, followed by Equity Global ex U.S. (+$58.0 bn), Bond USD Medium Term (+$39.6 bn), Bond USD Government Short Term (+$33.5 bn), and Equity Emerging Markets Global (+$33.4 bn).
As said before, money market is no core asset type for U.S. ETF investors. Therefore, it was surprising that Money Market USD (+$22.6 bn) was on the table of the 10 best-selling Lipper classifications for the first quarter of 2026.
Graph 7: Ten Best- and Worst-Lipper Global Classifications by Estimated Net Sales, January 1 – March 31, 2026 (USD Billions)
Source: LSEG Lipper
More generally, these numbers showed the U.S. ETF segment is also highly concentrated when it comes to fund 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.
On the other side of the table, the 10 peer groups with the highest estimated net outflows for Q1 2026 accounted for $24.5 bn in outflows.
Bond USD High Yield (-$5.5 bn) was the Lipper classification with the highest outflows for the month. It was bettered by Commodity Precious Metals (-$5.1 bn), Equity Sector Financials (-$3.3 bn), Equity Sector Consumer Discretionary (-$2.3 bn), and Equity Sector Communication Services (-$2.1 bn).
A view of the list of the 10 Lipper global classifications with the highest estimated net outflows indicates that U.S. investors may have reduced the overall risk in their portfolios by selling dedicated sector and emerging markets investments. In addition, they might have taken some profits from their investments in gold.
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 124 of the 476 ETF promoters in the U.S. holding assets at or above $1.0 bn, accounting for $13,580.8 bn. The largest ETF promoter in the U.S.—iShares ($4,030.8 bn)—accounted for 29.53% of the overall assets under management. Despite a comfortable lead as largest ETF promoter globally, iShares is somewhat closely followed by Vanguard ($3,893.9 bn), the number-two ETF promoter in the U.S. That said, the two largest ETF promoters in the U.S. have a comfortable lead over the number-three promoter—State Street SPDR ($1,824.0 bn).
Graph 8: The 10 Largest ETF Promoters by Assets Under Management, March 31, 2026 (USD Billions)
Source: LSEG Lipper
The 10-top promoters accounted for 88.79% of the overall assets under management in the U.S. ETF industry. This meant, in turn, the other 461 fund promoters registering at least one ETF for sale in the U.S. accounted for only 11.21% of the overall assets under management.
ETF Flows by Promoters
Since the U.S. ETF market is highly concentrated when it comes to assets under management by promoter, it was not surprising that seven of the 10 largest promoters by assets under management were among the 10-top selling ETF promoters for Q1 2026. Vanguard (+$121.3 bn) was the best-selling ETF promoter in the U.S. for the first quarter of 2026, ahead of iShares (+$94.1 bn) and ProShares (+$22.7 bn).
Graph 9: Ten Best-Selling ETF Promoters, January 1 – March 31, 2026 (USD Billions)
Source: LSEG Lipper
The flows of the 10-top promoters accounted for estimated net inflows of $345.9 bn. As for the overall flow trend in March, it was clear that some of the 478 promoters (101) covered in this report faced estimated net outflows (-$8.9 bn in total) over the course of Q1 2026.
Assets Under Management by ETFs
There were 5,116 instruments (primary share classes [5,043] and convenience share classes [73]) listed as ETFs registered for sales in the U.S. in the Lipper database at the end of March. Regarding the overall market pattern, it was not surprising assets under management at the ETF level were also highly concentrated. Only 950 of the 5,043 ETFs (primary share classes = portfolios) held assets above $1.0 bn each. These ETFs accounted for $13,012.8 bn, or 95.32%, of the overall assets in the U.S. ETF industry. The 10 largest ETFs in the U.S. accounted for $4,001.6 bn, or 29.31%, of the overall assets under management.
Graph 10: The 10 Largest ETFs by Assets Under Management, March 31, 2026 (USD Billions)
Source: LSEG Lipper
Estimated Net Flows at ETF Level
A total of 3,292 of the 5,043 ETFs (primary share classes = portfolios) analyzed in this report showed net inflows of more than $10,000 each for Q1 2026, accounting for inflows of $647.3 bn. This meant the other 1,751 instruments faced no flows, or net outflows, for the month. Upon closer inspection, 726 of the 3,292 ETFs posting net inflows enjoyed inflows of more than $100 m over the course of Q1 2026—for a total of $598.7 bn. The best-selling ETF for Q1 2026 in the U.S. was State Street SPDR Portfolio S&P 500 ETF, which enjoyed estimated net inflows of $25.9 bn. It was followed by ProShares GENIUS Money Market ETF (+$21.8 bn) and Vanguard 500 Index Fund; ETF (+$18.9 bn).
Graph 11: The 10 Best-Selling ETFs, January 1 – March 31, 2026 (Euro Billions)
Source: LSEG Lipper
The flow pattern at the fund level indicated there was a lot of turnover and rotation during the month, 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 31.07% of the overall inflows.
Given its size and the overall trend for net sales at the promoter level, it was surprising that only three of the 10 best-selling funds for Q1 2026 were issued by iShares. These iShares ETFs accounted for estimated net inflows of $33.5 bn. Meanwhile, iShares’ main competitor Vanguard issued four of the 10 best-selling ETFs in the U.S. which accounted for estimated net inflows of $51.9 bn.
The views expressed are the views of the author, not necessarily those of LSEG.
This article is for information purposes only and does not constitute any investment advice.
