00:00 Seana Smith

According to Strategas data, in the first quarter, investors flocked to cash-like bonds, commodities, and European ETFs, while remaining shy of sectors including energy, the S&P’s top performer year to date. For more on what these trends tell us about the broader market, I want to bring in Ben Slaven, he’s BNY Mellon Global’s head of ETFs for this week’s ETF reports sponsored by Invesco QQQ. Ben, thank you so much for being here. Talk to me about how risk-off these flows seem to you for Q1 because we had a lot of inflows into again, cash-like bonds, gold, even European equities, a lot of outflows into even the likes of tech. What does that tell you?

00:46 Ben Slaven

Well, ETF inflows have been on fire for the last several quarters, but here we see a change in terms of investor sentiment. Clearly, the top three categories are a marked difference from where we’ve been, certainly in 2024. Ultra short-term cash, gold, and Europe. These were not things on the leaderboard and not surprising given where equity markets have been choppy. Gold has surged past 3,000 and you’re seeing Europe really outperform US for the first time in a long time.

01:18 Seana Smith

In a long time. And I wonder to what extent one of these areas is important for investors to watch as we do head into the second quarter and two Q two Q earnings as well, which ETF should investors be looking at as a risk-on risk-off indicator of how the market is feeling?

01:40 Ben Slaven

Well, you’re seeing obviously an incredible amount of, you know, uh ETFs to choose from out there, certainly passive and active. And what we are seeing is a preference um, especially in the last couple years towards active. And what you’re seeing is about 9% of the assets and now roughly 40% of the flow year to date has gone into active. And so you’re seeing not just investors positioning tactically, but also looking for some kind of professional management in a wide variety of categories, including fixed income and equities in this market.

02:22 Seana Smith

So when we look at all the uncertainty that’s been in the market, the performance, you know, in the first quarter, you know, we obviously down across across the board, more uncertainty ahead, tariffs, you know, people are concerned like myself about the June quarter earning season. Are you seeing folks move assets into some of these inverse ETFs, whether it’s the S&P 500, you know, SH or PSQ for the Nasdaq composite?

03:00 Ben Slaven

Yeah, you know, it’s really a smaller slice of the ETF market, as you know, given the the the whole market, um, in terms of its size. But it does give you an indication about what investors are thinking and it’s clearly a a bellwether there. So not surprisingly, what have we seen? We’ve seen, um, a positive trend towards more flow going to the inverse or short ETFs and you’re starting to see some cooling in terms of flows into the leverage or the long side products. And so again, it’s all part of this trend of how investors are sort of leaning more towards that risk off and especially given the uncertainty, it just all kind of adds up to the same picture that you’re seeing with investors.

03:52 Seana Smith

How are you seeing risk on risk off sentiment play out in Bitcoin ETF flows?

04:00 Ben Slaven

Same, you know, it’s kind of a similar sentiment, although it is interesting to note, um, on what’s happening with Bitcoin. I mean, obviously, you know, investors are aware the price action, what we’ve seen the last, uh, you know, few months. However, um, it actually is a testament to the ETF wrapper because you’ve seen positive inflows. So you still on a quarterly basis saw net positive, nothing like we saw last year, not surprisingly, but still a billion plus into the category. And that’s really has to do more with the structural shift and the preference towards ETFs versus really, um, uh, sort of an indication of investor sentiment. We kind of see what’s going on in the market.

04:47 Seana Smith

All right, Ben. Thank you so much. Really appreciate you joining us on set to break that down for us. And also want to thank Chris Versachi for joining me for the hour to guest host. Really appreciate your insights today as well. Thank you so much.