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Growth-based global stocks fell 4% in March, but investors found refuge in bonds, gold and commodities as they sought protection from rising inflation and slower growth.
The first quarter of 2025 saw ETFs rake in $296 billion, eclipsing the previous first-quarter record of $248 billion set in 2021. This puts ETFs on pace to reach $1.3 trillion in inflows for the full year, according to a report from State Street Global Advisors.
The surge in ETF inflows reflects investors' growing concerns about inflation and slowing growth as the Trump administration's tariff policies create market uncertainty and challenge U.S. equity dominance.
While equities attracted $67 billion in March, U.S. sectors experienced $3 billion in outflows as investors reduced risk and looked overseas for opportunities. European exposures garnered $6 billion, their second-highest inflow on record.
Bond ETFs collected $22 billion in March, with investors favoring ultra-short government bond ETFs ($7 billion) and inflation-linked bond ETFs ($2 billion) as they sought defensive positions and inflation protection. Gold ETFs attracted $6 billion in inflows.
Investors Seek Safety Amid Economic Uncertainty
The market volatility stems from what the report describes as "confusion and delay" related to the Trump administration's mercantilist economic policies. U.S. equities declined by almost 6% in March, with over 70% of stocks in the S&P 500 producing losses.
Meanwhile, bond markets finished March flat, though not without volatility. The U.S. 10-year yield fluctuated between 4.15% and 4.36% during the month as falling growth projections pushed rates lower while rising inflation expectations created upward pressure.
Gold ETFs took in $12 billion in the first quarter, according to the report. This pushed rolling three-month flows for inflation-sensitive markets to their highest level since 2020, even surpassing the inflation markets of 2021 and 2022.
Bond ETFs are now on pace for $400 billion in inflows for 2025, which would break the 2024 record of $300 billion. The commodity category reached a milestone, exceeding $200 billion in assets for the first time, driven by strong flows and market appreciation, mainly in gold.
Active ETFs have experienced rapid growth and are on pace for $480 billion in flows this year, with assets now around $1 trillion. Active fixed-income ETFs are strong, projected to reach $200 billion in inflows—double their 2024 record.