DJ Shaw
2 min read
Fund flows returned to positive territory in May 2025 as U.S. open-end funds and exchange-traded funds drew $56 billion in new money after a turbulent month sparked by President Donald Trump's tariff announcements, according to a recent Morningstar report.
Bond investments dominated investor preferences amid ongoing uncertainty over global economic conditions. Fixed-income funds pulled in $54 billion during May, with nearly all taxable-bond categories posting gains, Morningstar data revealed. Municipal debt funds also saw strong demand, bringing in $7 billion for the month.
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Powered by Money.com - Yahoo may earn commission from the links above.The May turnaround follows rare withdrawals from long-term U.S. funds in April, according to Morningstar, highlighting how investors shift between asset classes during periods of market uncertainty while seeking both growth and protection in their portfolios.
Despite gains in the equity market, U.S. equity funds lost $17 billion as money flowed out of nearly every domestic equity category. International stock funds proved more popular, drawing close to $7 billion as investors looked beyond U.S. borders, Morningstar noted.
Funds using derivative strategies saw unprecedented demand, adding $6 billion in new money, as investors hunted for downside protection, the data indicated. These products, which typically employ covered-call approaches, accounted for most of the $7 billion flowing into nontraditional equity strategies.
Fund-company performance varied based on their key products, Morningstar observed. Invesco Ltd. (IVZ), The Vanguard Group and Fidelity Investments topped U.S. equity inflow rankings, while iShares, American Funds and T. Rowe Price Group (TROW) led outflows, the analysis showed.
Commodity investments reversed course in May after three months of heavy buying, the report showed. The two largest gold funds, the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU), lost a combined $1.8 billion as precious metals cooled off.
Alternative investments continued their momentum with $7.1 billion in May flows, contributing to $46.2 billion over the past year, according to Morningstar. Cryptocurrency products, led by the $70 billion iShares Bitcoin Trust ETF (IBIT), control this space with 85% of category inflows over 12 months.
