Financials Surge, Attracting Over $2.2 Billion as Energy Sector Performance Diverges from Investor Flows

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The U.S. Sector & Industry ETF landscape, comprising 260 funds from 52 issuers with a total of $817 billion in assets under management, experienced a notable rotation this week. Financials were the standout, leading all sectors in capital inflows while also posting respectable gains. In a clear divergence, the Energy sector was the week’s top performer, yet it finished the period with net outflows from investors. Meanwhile, Technology, the market’s largest sector by assets, was nearly flat on performance but continued to attract fresh capital, underscoring persistent investor interest in the space despite a pause in momentum.

Weekly Performance Recap: Energy Leads, Defensives Lag

The Energy sector set the pace for performance this week, climbing 2.29% and marking a clear risk-on sentiment in the market. Cyclically sensitive sectors also saw positive returns, with Real Estate (+0.30%), Financials (+0.22%), and Materials (+0.21%) all ending the week in positive territory. On the other end of the spectrum, defensive sectors struggled, with Consumer Staples (-2.07%) and Utilities (-1.68%) posting the most significant declines for the week.

Sector Performance (Week-to-Date):

  • Energy: 2.29%
    • Top ETF: DVXE (WEBs Defined Volatility XLE ETF): 4.96%
    • Bottom ETF: CRAK (VanEck Oil Refiners ETF): -0.26%
  • Real Estate: 0.30%
    • Top ETF: DESK (VanEck Office and Commercial REIT ETF): 2.38%
    • Bottom ETF: VNQI (Vanguard Global ex-U.S. Real Estate ETF): -1.48%
  • Communication Services: 0.26%
    • Top ETF: FCOM (Fidelity MSCI Communication Services Index ETF): 0.83%
    • Bottom ETF: RSPC (Invesco S&P 500 Equal Weight Communication Services ETF): -0.61%
  • Financials: 0.22%
    • Top ETF: KBWB (Invesco KBW Bank ETF): 1.93%
    • Bottom ETF: EUFN (iShares MSCI Europe Financials ETF): -3.55%
  • Materials: 0.21%
    • Top ETF: PYZ (Invesco Dorsey Wright Basic Materials Momentum ETF): 1.01%
    • Bottom ETF: MXI (iShares Global Materials ETF): -0.12%
  • Information Technology: -0.13%
    • Top ETF: XSW (SPDR S&P Software & Services ETF): 1.35%
    • Bottom ETF: SOXX (iShares Semiconductor ETF): -1.62%
  • Industrial: -0.46%
    • Top ETF: ITA (iShares U.S. Aerospace & Defense ETF): 1.36%
    • Bottom ETF: SEA (U.S. Global Sea to Sky Cargo ETF): -2.70%
  • Consumer Discretionary: -0.59%
    • Top ETF: RSPD (Invesco S&P 500 Equal Weight Consumer Discretionary ETF): 0.06%
    • Bottom ETF: XRT (SPDR S&P Retail ETF): -1.23%
  • Health Care: -0.70%
    • Top ETF: XHS (SPDR S&P Health Care Services ETF): 0.58%
    • Bottom ETF: MDEV (First Trust Indxx Medical Devices ETF): -1.69%
  • Utilities: -1.68%
    • Top ETF: PSCU (Invesco S&P SmallCap Utilities & Communication Services ETF): -0.47%
    • Bottom ETF: DVUT (WEBS Defined Volatility XLU ETF): -4.11%
  • Consumer Staples: -2.07%
    • Top ETF: PSL (Invesco Dorsey Wright Consumer Staples Momentum ETF): -1.58%
    • Bottom ETF: DVXP (WEBs Defined Volatility XLP ETF): -3.84%

Weekly Flows Summary (as of 8/28/2025): Investors Double Down on Financials

Investor allocations heavily favored the Financials sector, which attracted over $2.2 billion in new assets, far outpacing all other groups. The buying extended to other cyclical areas, with Industrials (+$417M) and Consumer Discretionary (+$348M) also seeing significant inflows. At the other extreme, investors pulled capital from Consumer Staples (-$392M) and Energy (-$104M), signaling a rotation away from defensive and commodity-linked plays. The bulk of the week’s inflows were concentrated in a few large Financials ETFs, while outflows were spread across Staples, Technology, and Real Estate funds.

Largest Individual ETF Flows (5-Day):

  • Inflows:
    1. XLF (Financial Select Sector SPDR Fund): +$1,495M
    2. KRE (SPDR S&P Regional Banking ETF): +$478M
    3. XRT (SPDR S&P Retail ETF): +$188M
    4. KBWB (Invesco KBW Bank ETF): +$171M
    5. IGV (iShares Expanded Tech-Software Sector ETF): +$129M
  • Outflows:
    1. XLP (Consumer Staples Select Sector SPDR Fund): -$389M
    2. SOXX (iShares Semiconductor ETF): -$378M
    3. REET (iShares Global REIT ETF): -$118M
    4. IYH (ishares U.S. Healthcare ETF): -$104M
    5. IBB (iShares Biotechnology ETF): -$103M

Issuer and Product Landscape

The Sector & Industry ETF market remains highly concentrated, with the top three issuers controlling over 84% of assets. SPDR leads with a 42.51% market share, followed by Vanguard at 25.88% and iShares at 16.19%. This week, SPDR was the clear winner in asset gathering, pulling in over $2.5 billion in net inflows, while iShares experienced the largest net outflows, shedding $309 million. The product landscape has remained active over the past quarter, with 22 new ETFs launching, led by issuer WEBS. During the same period, two funds were closed, one each from First Trust and Range.

Disclosures

This material is for informational purposes only and should not be considered investment advice. All investments, including ETFs, involve risk, including the possible loss of principal. Investors should consider their investment objectives, risks, charges, and expenses carefully before investing.

This analysis was developed by the team at ETF Action. We leverage advanced AI tools to assist in the drafting and refinement of our content, based on our expert prompts, direction, and final review.

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