Investing.com — Following the recent U.S. elections, domestic equity ETFs experienced a surge in inflows, largely directed at large-cap core exposures, according to Citi.
“Domestic Equity flows were overwhelmingly positive,” Citi stated, with the post-election environment favoring riskier assets.
Total (EPA:TTEF) U.S. equity ETF inflows reached “an impressive $46.3 billion,” of which nearly $14 billion was funneled into large-cap core. Smaller-cap ETFs also saw significant inflows, which were notably strong relative to market cap, said Citi.
The bank said investment trends leaned heavily towards cyclical sectors, particularly Financials, which led inflows within sector-based ETFs.
Additionally, the report noted increased investor interest in U.S. manufacturing, a key thematic ETF, though inflows were comparatively modest. Conversely, defensive sectors such as Utilities and Real Estate saw redemptions as investors pivoted towards sectors poised to benefit from economic growth.
Factor-based ETFs were also said to have seen notable engagement, with the bank highlighting momentum and equal-weighted ETFs as popular choices. Active dividend ETFs also drew new assets, reflecting a preference for yield-focused strategies amid the current economic climate.
International ETF flows, in contrast, were “muted,” said Citi, with flows into developed markets offset by outflows from Asia-Pacific and broader emerging market products.
Citi described this trend as a “post-Trump win bias” that reflected a shift towards U.S. assets over international opportunities.
In fixed income, the bank states that high-yield bonds attracted the largest inflows, supported by a “risk-on bias,” while Treasury ETFs with longer durations also saw purchases.
However, commodity ETFs, particularly those tracking gold, faced outflows as investors likely reallocated toward growth-oriented sectors. Digital assets were also an inflow driver, with a marked increase in currency ETF holdings tied to these assets.
