Flow & Tell with iShares | Apr 2022


April saw markets grapple with a bleak macroeconomic landscape while investors struggled to find refuge across asset classes. ETF flows saw investors positioning in low volatility ETFs as they tried to navigate markets, but not all flows were a shift in sentiment — some large outflows were likely a relative value shift towards derivatives. Although earnings season is in full swing, investors have largely stuck with their sector allocations as the broader market struggles forward.


More to flows than meet the eye.

Large outflows from S&P 500 ETFs were likely due to a shift to derivatives, not a shift in sentiment.

Investors are seeking refuge from volatility.

Investors appear to be positioning defensively in low volatility ETFs as they navigate an uncertain macroeconomic environment.

Earnings give way to macro.

Sector sentiment has broadly stayed the same as the macroeconomic narrative weighs on the broader market.


April ETF heat map

April ETF flows compared with index performance

Scatter plot chart showing the relationship between index performance and ETF sub-asset class flows for April 2022.

Source: BlackRock, Bloomberg, chart by iShares Investment Strategy. As of May 01, 2022. Flows normalized by AUM as of March 31, 2022. Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. Index performance is measured by the following indexes: Communication Services: S&P 500 Communication Services GISC Level 1 Index; Consumer Discretionary: S&P 500 Consumer Discretionary GICS Level 1 Index; Growth: Russell 3000 Growth Index; Financials: S&P 500 Financials GICS Level 1 Index; Industrials: S&P 500 Industrials GICS Level 1 Index; Value: Russell 3000 Value Index; Utilities: S&P 500 Utilities GICS Level 1 Index; Health Care: S&P 500 Health Care GICS Level 1 Index; U.S. Treasury: ICE BofA 10-Year U.S. Treasury Index; HY Credit: iBoxx USD High Yield Index; Gold: ICE LBMA Gold Index; Consumer Staples: S&P 500 Consumer Staples GICS Level 1 Index; Commodities: S&P GSCI Index; Oil & Gas: S&P GSCI Crude Oil CME Index. Coloring is based on quadrants: quadrant I: green; quadrant II: yellow; quadrant III: pink; quadrant IV: purple.


Although April saw markets struggle to perform, ETF flows were not quite as negative as headline numbers suggest.1 Over the course of the month, IVV (iShares Core S&P 500 ETF), SPY (SPDR S&P 500 ETF), and VOO (Vanguard S&P 500 ETF) collectively saw over $33 billion in outflows.2 Unusually, the outflows were not accompanied by large exchange volumes.

Flows of this size are typically tied to the derivatives markets. When other types of financial instruments that track broad market indexes (e.g., futures and swaps) trade at a premium, institutional investors often switch into ETFs as a lower cost alternative. When this relationship reverses, as we’ve seen recently amid low demand for equity exposure, investors may redeem ETFs to take advantage of discounts in the derivatives market. This leads to both sizable inflows and outflows, depending on the relative value proposition of the current market environment. It’s important to keep in mind, however, that these outflows may not represent investor selling or a shift in sentiment — just a shift in the way they get exposure to the underlying index.

More than meets the eye

Bar chart showing monthly ETF flows for IVV US Equity, SPY US Equity, and VOO US Equity from February through April 2022.

Source: BlackRock, Bloomberg, chart by iShares Investment Strategy. As of May 01, 2022. “IVV” is the iShares Core S&P 500 ETF, “SPY” is the SPDR S&P 500 ETF, “VOO” is the Vanguard S&P 500 ETF.


April was the third worst month for the S&P 500 over the last decade, driven lower by prospects of tighter monetary policy, deteriorating economic growth, and geopolitical uncertainty.3 As a result, some investors have turned defensive in their positioning, looking for ways to protect their portfolios against the risk of continued volatility and downturns. Low volatility ETFs subsequently saw $1.2 billion in inflows in April — the largest month of inflows since February 2020.4 

Low volatility indexes are designed to identify stocks with lower volatility than their peers and low correlations to other equities, therefore dampening large price swings and seeking to mitigate risk during market downturns. Given the waning macroeconomic environment — particularly rising rates that are generally less supportive to risk assets — investors may be using low volatility ETFs to refocus on risk management. By incorporating low volatility strategies into a portfolio, an investor can help position to mitigate losses during an equity sell-off, while also ensuring they stay invested in the market. For instance, during April’s dismal market performance, the minimum volatility index used as a benchmark index for ETFs such as the iShares MSCI USA Min Vol Factor ETF (USMV) fell less than the broader index.5

Positioning in low volatility

Bar chart showing monthly ETF flows into low volatility ETFs from November 2021 through April 2022.

Source: BlackRock, Bloomberg, chart by iShares Investment Strategy. As of May 01, 2022. ETF groupings determined by BlackRock, Markit.


Earnings season is in full swing, with over half of the S&P 500 having reporting by the end of April.6 Pervasive uncertainty in the market has weighed significantly on earnings season, despite much of the data coming in line with historical averages. Companies that have beat on earnings have struggled as broad indexes move lower, while forward guidance plays an increasingly significant role in investor sentiment.

Most of the of sector flow trends we saw prior to earnings season in Q1 have continued: Traditionally defensive sectors (e.g., health care and utilities) gathered assets, while consumer discretionary and communication services ETFs posted outflows.7 Notably, the financial sector saw a dramatic reversal in flows from the first quarter to April, shedding nearly $7.0 billion in assets over the course of the month.8 Expectations forecasted negative earnings growth in the sector: A drawdown in investment banking activity and tightening financial conditions was only exacerbated by base effects, prompting some investors to move away from the sector.

Sector trends, reaffirmed

Bar chart showing ETF flows across GICS sectors in the first quarter of 2022 compared to ETF flows in April 2022.

Source: BlackRock, Bloomberg, chart by iShares Investment Strategy. As of May 01, 2022. ETF groupings determine by BlackRock, Markit.




Gargi Pal Chaudhuri

Gargi Pal Chaudhuri

Head of iShares Investment Strategy Americas at BlackRock

Kristy Akullian

Investment Strategist


Nick Morales

Investment Strategist