Equity funds alone drew more than US$1 trillion as State Street forecasts US$2.3 trillion by year end
Inflows into US-listed exchange-traded funds passed US$1.54tn by the end of September, exceeding the US$1.52tn full-year record set in 2025.
Reuters, citing State Street Investment Management data, reported that the figure covers US-listed funds only.
Matthew Bartolini, global head of research strategists at State Street Investment Management, expects inflows into US-listed ETFs to reach US$2.3tn by year end, according to the same report.
Equity ETFs took in more than US$1tn, Reuters reported, followed by fixed income products at more than US$469bn.
Among equity sectors, technology funds recorded the largest inflows at more than US$59bn, while financials recorded outflows of more than US$3.8bn.
Funds tracking US stocks drew about US$655bn, the most of any geographic category in the State Street data.
Funds tracking international developed markets drew US$150.4bn.
Bartolini told Reuters that investors continue to use ETFs to allocate capital, build portfolios, and adapt to changing market conditions. He said mutual funds "remain mired in persistent outflows."
The Vanguard S&P 500 ETF, the largest ETF in the world by assets under management, had gained more than 13 percent so far this year as of Friday morning, Reuters reported.
Enthusiasm for AI and strong earnings pushed US stocks to record highs earlier this year, and inflation fears arising from the US-Iran conflict and soaring bond yields spurred volatility last month.
A Goldman Sachs report published on Monday estimated that US pension funds alone would sell US$33bn in stocks in the days around the end of the quarter to bring target allocations back into line, funnelling the proceeds into bonds, Reuters reported.
Those projections rank the just-completed third quarter in the 98th percentile of all such estimates in absolute dollar terms going back to January 2000.
"I do think this quarter will be as significant a rebalancing as anything we've seen historically because volatility is higher and because of how significant the drift away from target allocations has been," Jordan Jackson, global markets strategist at JP Morgan Asset Management, told Reuters.
Jackson said he has spotted signs of rebalancing in mutual fund and ETF flows in recent weeks, with investors emerging as bigger buyers of bonds.
The US Internal Revenue Service and the US Treasury issued a revenue ruling on Section 351 exchanges used to create new ETFs from baskets of highly appreciated stock, alongside a notice setting out broader guidance, CNBC reported.
"Our message on these conversions is clear: they don't work under existing law," US Treasury Secretary Scott Bessent said of conversions designed to avoid tax, in an X post quoted by by the same outlet.
A Bloomberg analysis from last July found that US$22bn in ETFs had been created for this purpose, deferring as much as US$6.5bn in capital gains, according to CNBC.
The IRS and Treasury are requesting comments on the notice by October 28.
