Citi: Post-election ETF domestic equity flows were ‘overwhelmingly positive’

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:) 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 , 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 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.