Aussie investors dive into US equity ETFs despite market pullback

Global X ETFs Australia has revealed that its US equity-themed exchange traded fund (ETF) had its best month on record of net flows in April despite the “sharp sell-down” currently plaguing the US market.

The Global X US 100 ETF (U100), recording $26 million in net flows, was one of several ETFs managed by the Australian specialist to reach new highs, joined by Australian covered call ETF strategies and gold ETFs.

According to the manager, a covered call “is an options strategy where investors sell a call option on shares they already own, providing income from the premium received for selling the option, though limiting upside potential if the share price rises above the call strike price”.

The Global X S&P/ASX 200 Covered Call Complex ETF (AYLD) saw a new record of $14.7 million in net flows across April.

“More broadly, solid inflows into US equity ETFs reflect continued confidence in the US exceptionalism narrative and sustained appetite for exposure to the world’s largest economy,” Marc Jocum, Global X Senior Product and Investment Strategist, said.

“Downward and sideways trending markets, that are historically the ideal conditions in which covered call strategies to outperform, triggered by Trump’s tariffs saw the Australian covered call ETF category accumulate $25 million as some investors capitalised on volatility. ”

Global X also picked up a majority of the month’s net flows into gold ETFs, with $82 million out of the total $110 million.

“Globally, we have seen 13 successive weeks of net inflows into gold ETFs, mainly from Asian markets, as investors look to diversify away from traditional US-safe haven assets such as the US dollar and US Treasuries in favour of the precious yellow metal,” Jocum said.

“We are seeing Australians use ETFs to take advantage of the volatile market conditions and lower prices to build their wealth and they are using ETFs to do that, while moving away from underperforming actively managed funds to do that.

“Australians are increasingly unwilling to pay the high fees charged by active managers, especially as their performance continues to lag, and they are using passively managed ETFs to gain exposure to the still all-important US equity market.

“We expect investors will continue to take advantage of lower equity prices and invest in Australian and global assets, which will likely lead to record inflows into the Australian ETF market in 2025.”