ETFs, or exchange-traded funds, have seen a surge in popularity in recent years. One key advantage highlighted by many is the flexibility they offer investors, which traditional mutual funds lack. The main difference is that you can easily buy and sell shares directly on the stock exchange and do not have to wait, sometimes for a few days, for the funds to be available in your account.
According to a report by the auditing giant PwC, the value of the ETF market reached $14.6 trillion last year. It is believed that this figure will continue to grow to $30 trillion by 2030.
During the turbulent stock market in the wake of Donald Trump’s announced tariffs, larger American ETFs also saw an influx of capital. Net purchases for active ETFs amounted to around $2.4 billion during the period from April 1 to April 11, when the market was most volatile.
40% of the inflow went to Capital Group, and a significant portion of investors chose to buy the capital manager’s ETF Dividend Value, which focuses on high dividend-paying companies, according to a Morningstar analysis.
Net purchases for passive ETFs totaled $20 billion during the same period.
However, it is in actively managed ETFs where we see the most significant changes in portfolios. Several of them chose to sell off companies in the American aerospace and defense industry and federal contractors during the period, likely due to concerns about higher costs associated with Trump’s tariffs and fears of cutbacks within the Department of Government Efficiency (Doge).
For example, JPMorgan Active Value ETF and JPMorgan Active Growth ETF almost completely divested their joint stake in management consulting company Booz Allen Hamilton, which earns almost all its revenue from federal contracts.
JPMorgan Active Value also chose to sell all its shares in weapons manufacturer Lockheed Martin and aircraft giant Boeing on April 3 and 4.
Banking and financial conglomerate Capital One Financial was the most popular purchase among active ETFs during the period, although iShares US Equity Factor Rotation Active accounted for almost all purchases.
Companies in the food and beverage sector were also popular during the period: PepsiCo, Mondelez, and Tyson Foods were among the top 20 most purchased stocks.