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Record Highs and Sharp Selloffs

March 5, 2025 | by ltcinsuranceshopper

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etf.com
etf.com

February was a month of mixed emotions in the markets. The S&P 500 reached an all-time high on Feb. 19, driven by optimism over strong earnings growth and the potential for new tax cuts and deregulation under the new Trump administration. But the rally was short-lived.

Stocks sold off in the final days of the month as concerns about trade wars, tariffs and slowing economic growth rattled investors.

Still, despite the volatility, ETF flows saw another strong month: $110.8 billion in net inflows, bringing year-to-date flows to $217.5 billion.

U.S. equity ETFs continued to dominate, pulling in $52.2 billion during the month. Investors remained committed to large-cap stocks, while small-caps struggled as risk appetite waned. International equity ETFs also saw steady demand, with $15.4 billion in inflows, while fixed-income ETFs were another bright spot, bringing in $30.8 billion.

On the other side, currency ETFs experienced $2.7 billion in outflows, while leveraged ETFs lost $2.3 billion as traders backed away from high-risk plays amid growing uncertainty.

The SPDR S&P 500 ETF (SPY) was the top asset gatherer in February, adding $14.6 billion in the month. That helped SPY maintain its lead over the Vanguard S&P 500 ETF (VOO) in total AUM, though Vanguard’s S&P 500 ETF briefly surpassed SPY mid-month before falling back.

While SPY won the month, VOO remains the top ETF for 2025 so far, with $28.5 billion in year-to-date inflows.

Gold ETFs were another major winner last month. The SPDR Gold Trust (GLD) saw $3.8 billion in inflows as investors sought safety amid the late-month stock selloff and gold prices surged toward $3,000 per ounce.

But the demand for safety extended beyond gold, with investors pouring money into fixed-income ETFs like the iShares 0-3 Month Treasury Bond ETF (SGOV) and the Janus Detroit Street AAA CLO ETF (JAAA), both of which saw strong inflows as investors sought yield without interest rate risk

On the outflows side, the iShares Russell 2000 ETF (IWM) was hit hardest, losing $3.9 billion, as small-caps underperformed large-caps in the volatile market environment.

Long-duration bonds also struggled, with the iShares 20+ Year Treasury Bond ETF (TLT) seeing $2.9 billion in outflows, though recent price action suggests that TLT has started climbing again as economic concerns mount.

Bitcoin ETFs took a hit as well, with the Fidelity Wise Origin Bitcoin Fund (FBTC) losing $1.4 billion amid a broad sell-off in cryptocurrency. Bitcoin prices dropped sharply in February as investors adopted a more risk-off stance and uncertainty loomed over U.S. crypto reserve policies.



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