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Todd Sohn

ETF Strategist

Jim Martin

National Accounts & Advisory Sales

(704) 995-3655

jmartin@strategasasset.com

Skeptical Equity ETF Flows

05/28/2025

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This week, ETF Expert Todd Sohn gives us an insightful analysis on shifting dynamics since 2025 and the uncommon long volatility position, as well as a closer look at the current state of bull market cycles as we approach summer.

Definitions
The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States.  
An exchange-traded fund (ETF) is a pooled investment security that can be bought and sold like an individual stock.  
Fund flows represent the cash that goes into or out of companies, financial assets, sectors, or other market categories.   
Equity ETFs invest in a basket of company stocks (also known as equities or shares). They are the most common type of ETFs.
A leveraged exchange traded fund (LETF) is a security that uses financial derivatives and debt to amplify the returns of an underlying index or other assets it tracks.
A bear market is a downward trend in financial markets, indicating a weakening economy and a loss of investor confidence.
Sector ETFs focus on groups of companies that are pursuing the same type of business, like energy, health care, utilities, or technology, for example.
A cyclical sector is a type of industry that is sensitive to the business cycle, such that revenues generally are higher in periods of economic prosperity and expansion and are lower in periods of economic downturn and contraction.
A bull market reflects a price trend in which prices rise for an extended period of time.
Small cap refers to a company whose market capitalization is considered small, from $250 million to $2 billion.
Defensive funds, also known as conservative or safe funds, are designed to protect investors' capital and provide stable, reliable returns, especially during market downturns. They prioritize stability and minimize risk, often by investing in assets like bonds, blue-chip stocks, and dividend-paying stocks.
The CBOE Volatility Index (VIX) is a real-time index that represents the market’s expectations for the relative strength of near-term price changes of the S&P 500 Index (SPX).
VIX futures are futures contracts based on the CBOE Volatility Index (VIX), a measure of market expectations of near-term volatility in the S&P 500. They allow traders to take a view on the future value of the VIX, enabling strategies for risk management, alpha generation, and portfolio diversification.
Speculators are sophisticated investors or traders who purchase assets for short periods of time and employ strategies in order to profit from changes in the price of those assets.

This communication was prepared by Strategas (“we,” “us,” or “our”), a brand that offers investment advisory services through Strategas Asset Management, LLC, an SEC Registered Investment Adviser, and provides research to institutional investors through Strategas Securities, LLC, a broker-dealer and FINRA member firm and an SEC Registered Investment Adviser. Information regarding market or economic trends, or the factors influencing historical or future performance, reflects the opinions of management as of the date of this communication, and are subject to change. This communication is provided for informational purposes only and should not be construed as an offer, recommendation, nor solicitation to buy or sell any specific security, strategy, or investment product. The information contained herein has been obtained from sources we believe to be reliable, but no guarantee of accuracy can be made. This communication does not constitute, nor should it be regarded as, investment research or a research report or securities recommendation and it does not provide information reasonably sufficient upon which to base an investment decision. This is not a complete analysis of every material fact regarding any company, industry, or security. Additional analysis would be required to make an investment decision. This communication is not based on the investment objectives, strategies, goals, financial circumstances, needs or risk tolerance of any particular client and is not presented as suitable to any other particular client. Past performance does not guarantee future results. All investments carry some level of risk, including loss of principal.

Strategas Asset Management, LLC and Strategas Securities, LLC are affiliated with Robert W. Baird & Co. Incorporated ("Baird"), a broker-dealer and FINRA member firm, and an SEC Registered Investment Adviser, although the firms conduct separate and distinct businesses.

The ETFs described herein are referenced solely for illustrative purposes and should not be construed as an investment recommendation. An investment in exchange traded funds involves risk, including the possible loss of principal. For important disclosures and risks relating to each ETF referenced herein, see each respective funds’ prospectus or contact your financial professional.

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