ETF Flows Don’t Run Dry in January

January Key Takeaways

• Global stock and bond gains powered the Morningstar Global 60/40 Index to a 2.17% January return.
• US exchange-traded funds collected roughly $90 billion in January, a solid haul for a traditionally quieter month.
• Active ETFs pulled in a record $43 billion, dusting the previous monthly record $34 billion.
• Ultrashort bond funds gathered $12 billion to pace the red-hot taxable-bond cohort.
• The derivative income Morningstar Category, home to covered-call ETFs, notched a record $5.6 billion of January inflows.
• Cryptocurrency-linked ETFs stayed in vogue with another strong month.
• Vanguard absorbed about $35 billion in January, nearly triple the next-closest ETF provider.

The table below shows January returns for a sample of Morningstar analyst-rated ETFs that represent major sections of the stock and bond markets. The global blended portfolio carried last year’s momentum into this one, climbing 2.0% on the month. Vanguard Total World Stock ETF VT did the heavy lifting with a 3.1% return. Bond components Vanguard Total Bond ETF BND and Vanguard Total International Bond ETF BNDX kicked in gains of 0.6% and 0.2%, respectively.

US ETFs Brought in $90 Billion in January

Investors sank roughly $90 billion into US ETFs in January. That is a solid haul, especially for January—historically the second-quietest month for ETF flows, behind only vacation-laden August. ETFs’ average January organic growth rate was 0.67% over the past 15 years. Their haul last month equated to about 0.97% of their starting assets.

Active ETFs reeled in a record $43 billion in January. That blew away the previous monthly high $34 billion from November 2024. Don’t be surprised if the new record doesn’t last long either. An estimated 579 new active ETFs launched in 2024. As more ramps onto the active ETF highway open each day, more traffic will likely follow shortly thereafter.

Below, I dive into January returns across the bond market and flows into the ETFs that track them. This article also highlights flows across nontraditional stock ETFs, cryptocurrency ETFs, and the top ETF providers.

I take a closer look at January stock ETF performance and flows in a separate article, which you can also find at the link below.

Bond ETF Performance: Intermediate and Long-Term Bonds Absorb Bumps, Come Out on Top

January returns were balanced across short, intermediate, and long-term bond portfolios. IShares Short Treasury Bond ETF SHV, iShares US Treasury Bond ETF GOVT, and iShares 20+ Year Treasury Bond ETF TLT each gained between 0.3% and 0.6% on the month. Mixed economic data made it a bumpy ride for intermediate and long-term bonds, though. They stumbled after a hot jobs report reignited the same inflation concerns that plagued them for the past three years, then recovered thanks to mild inflation readings and a brief stock selloff that drove up bond demand. By the time the Federal Reserve announced that interest rates would hold steady—as nearly everyone predicted—all three Treasury ETFs had scratched out modest gains on the month.

January was particularly kind to bond ETFs built around credit risk. SPDR Bloomberg High Yield Bond ETF JNK climbed 1.4% on the month to beat the broader, more conservative BND by 75 basis points. That was the latest win in a dominant five-year stretch for JNK. The portfolio of below-investment-grade corporate bonds trounced BND by nearly 4 percentage points annualized from February 2020 through January 2025. But how much gas do high-yield strategies have left in the tank? At the end of January, option-adjusted credit spreads for high-yield bonds over comparable Treasuries reached their tightest level since May 2007. That means that valuations are abnormally high, making high-yield bonds more vulnerable than most to a painful correction.

Taxable-Bond ETFs Had Solid Inflows, But Ultrashort Bond Funds Carried the Day

Taxable-bond ETFs followed up their year of banner inflows with roughly $37 billion of net new money in January. That edged out the $35 billion record from July 2024, though their organic growth rate fell short of that month because of their larger starting base. Still, the category group grew at more than a 2% clip in January, a lofty hurdle it cleared just twice in 2024.

Ultrashort bond funds carried the day. Investors poured more than $12 billion into these ETFs, whose portfolios comprise investment-grade debt with durations of less than 1 year. That short horizon makes them relatively unresponsive to interest-rate fluctuations, a trait many investors have clamored for over the past three years. Janus Henderson AAA CLO ETF JAAA led the category with $3.3 billion of inflows in January, the latest triumph in a run that saw its assets grow to $20 billion from $6 billion since the start of 2024. The active strategy’s success spawned a wave of imitators: seven CLO-based ETFs have launched in the past four months alone. Four of them have already gathered north of $50 million—evidence of the widespread demand for these products.

CLO ETFs weren’t the only engine for the ultrashort category. Uber-safe cash alternative iShares 0-3 Month Treasury Bond ETF SGOV reeled in $2.5 billion, and WisdomTree Floating Rate Treasury ETF USFR gathered about $1.1 billion. Both ETFs turned the clock back to 2022, when they combined for $24 billion of inflows and ranked among the five most popular bond ETFs. That year was characterized by soaring inflation and the interest-rate hikes meant to rein it in. January’s heavy flows into the ultrashort bond category may signal that investors are preparing for more of the same in 2025.

Covered-Call ETFs’ Record Inflows Stood Out Among Nontraditional Stock ETFs

The derivative income category, home to covered-call ETFs, raked in a record $5.6 billion in January. This space has notched net inflows in each month since March 2020—58 consecutive months. And the inflows are accelerating. A pair of J.P. Morgan products carried the cohort for years, but the broadening menu of covered-call strategies has opened the floodgates. Even single-stock covered-call ETFs are starting to fill out. YieldMax ETFs that write call options atop stocks like MicroStrategy MSTR, Nvidia NVDA, and Tesla TSLA collectively hauled in $1.3 billion in January. The category’s most influential ETFs remain the ones that put it on the map, but single-stock ETFs can help boost the derivative-income category to new heights—for better or worse.

Elsewhere in the nontraditional cohort, defined-outcome ETFs collected a fresh $1.6 billion, just shy of their October 2023 record. These ETFs promise investors a specified degree of protection from stock market losses. On the heels of the Nvidia flash crash and tariff-induced market volatility, that proposition may grow more attractive by the month.

Crypto ETF Inflows Were Buoyed by a Crypto-Friendly Administration

If President Donald Trump’s election victory breathed life into crypto ETFs, it was a powerful puff. The digital assets category pulled in $5.3 billion in January, the fourth straight month it hit the $5 billion threshold. The category collected about $27 billion from October 2024 through January 2025. It gathered $21 billion over the prior nine months, a span that included the launch of the first spot bitcoin and ethereum ETFs. President Trump’s crypto-friendly platform explains much of the resurgence, but its durability comes as somewhat of a surprise.

Top ETF Providers: Vanguard Remains in First Place

Vanguard led all providers in ETF flows for the fourth straight year in 2024. Its bid for a five-peat (trademark pending) started off strong. Vanguard absorbed about $35 billion in January, nearly triple the inflow of its closest competitor.

Fidelity didn’t top the leaderboard last year, but it should be thrilled with its 2024 campaign. Its ETFs raked in $40 billion on the year, good for a 78% organic growth rate that ranked first among the 10 largest ETF providers. Encouragingly, the growth of Fidelity’s ETF lineup did not come at the expense of its mutual funds. Compared with Vanguard, Invesco, and Dimensional—all of whom saw at least $20 billion flee their mutual funds—Fidelity’s roster of legacy open-end vehicles garnered strong inflows in 2024. All three of those firms have larger ETF footprints. But if Fidelity can continue to grow its own without cannibalizing its mutual fund lineup, that constitutes a resounding success.