US Fund Investors Pull Back in March Amid Market Volatility

Amid growing uncertainty around the trajectory of the US and global economies, investors pulled back on purchases of long-term US open-end funds and exchange-traded funds. Just $24 billion made its way into these vehicles in March 2025, the lowest total since April 2024. Five of the 10 category groups suffered outflows.

Long-Term US Flows

ETFs Expand Their Share of the Taxable-Bond Market

Taxable-bond ETFs raked in nearly $100 billion in the first quarter compared with $20 billion into taxable-bond mutual funds. That pushed ETFs’ share of the taxable-bond fund market to 30%, triple its share from 10 years earlier. ETFs have especially taken root in the government-bond Morningstar Categories, where their combined $362 billion base represents about two thirds of all the assets.

Taxable-Bond Flows

Most US Equity Categories Suffer Outflows in March

US equity funds took in a paltry $5.7 billion in March. Outflows from six of the nine Morningstar Style Box categories nearly outweighed the usual flows into passive large-blend funds and notable flows into large-value funds. Dividend-oriented funds such as Schwab U.S. Dividend Equity ETF SCHD gave the large-value category a boost. The broader dividend-fund basket, which includes dividend-growth funds, took in $5.6 billion in March, a strong relative showing more reminiscent of 2022’s environment.

Dividend-Oriented Flows

Bond Funds See Narrower Demand in March

Investors sank $23 billion into taxable-bond funds in March, their quietest month since December 2023. Ultrashort-bond funds claimed $15 billion of that sum, heavy lifting that concealed weaker demand across the bond space. Ten of the 23 taxable-bond categories endured outflows. Bank-loan and intermediate-government funds each bled more than $5 billion, weighing on the broader group. Municipal-bond funds saw money leave as well.

Fixed-Income Flows

Nontraditional-Equity Funds Set Fresh Record in First Quarter

Nontraditional-equity funds absorbed a record $23 billion in the first quarter. The derivative-income category, home to covered-call strategies like JPMorgan Nasdaq Equity Premium Income ETF JEPQ, led the way with a record $16 billion haul. Defined-outcome funds’ $4.3 billion inflow was a record, too. Most products in the nontraditional space offer some degree of protection from market losses, a proposition that volatile markets made attractive in the first quarter.

Nontraditional-Equity Flows

Commodities Funds Regain Their Luster Thanks to Surging Gold

Gold is typically viewed as a safe-haven asset, and prices jumped higher through 2025’s first quarter thanks to a rush to safety spawned by talk of tariffs and a potential recession. In March, flows into commodities-focused funds, which contain mostly gold-tracking offerings, topped $7 billion in a month for the first time since 2020. This comes after a strong February with nearly $5 billion of inflows.

Commodities-Focused Flows

Tactical Investors Weren’t Afraid to Buy the Dip in March

Nearly $8 billion rushed into the trading–leveraged equity category last month. This category includes funds like ProShares UltraPro QQQ TQQQ, which provides triple-leveraged exposure to the Nasdaq-100 Index; it raked in $2.8 billion in March. Traders tend to load up on these products when markets sink, using them as chips to bet on a swift rebound.

This article is adapted from the Morningstar Direct US Asset Flows Commentary for March 2025. Download the full report here.