ETF investors have been adding to their portfolios during recent volatility

By Vanguard

ETFs

Navigating volatility

 

Increases in net flows to ETFs suggest investors are using volatility to add to their portfolio

Geopolitical events like the current Middle East conflict and supply chain disruptions can create short term market volatility, but they rarely change the long-term fundamentals for investors as the Vanguard Index Chart demonstrates.

Vanguard has seen more than $1.5 billion of net inflows into its ETFs in the first half of March, already outpacing flows in January and February, indicating investors are using the volatility to add to their portfolios.

Andrew Jones, ETF Investment Product Manager at Vanguard, says flows have been focused towards equity ETFs, with a clear preference for broad-based, diversified core exposures.

“The most popular ETF has been Vanguard Australian Shares ETF (VAS) with around $670 million of inflows, followed by Vanguard MSCI International Shares ETF (VGS) at approximately $440 million,” Mr Jones said.

Other notable inflows include Vanguard Australian Shares High Yield ETF (VHY) with approximately $100m and Vanguard MSCI Index Shares (Hedged) ETF (VGAD) with approximately $66m, and the newly launched Vanguard S&P 500 ETF (V500), which has added around $45 million since launch.

“Both of our new ETFs, the Vanguard S&P 500 ETFs (V500 and the currency hedged V5AH) have started strongly, and we are pleased with how quickly investors are embracing them,” Mr Jones said.

Vanguard’s diversified ETF suite has also remained positive, totaling around $58 million of inflows.

 

Strong start to the year for ETFs

ASX ETF figures show that $4.4 billion flowed into Australian ETFs in February, following $5.1 billion in January.

With $9.5 billion of inflows recorded to February and a strong start to March, it is early days, but the ETF industry is on pace for a very strong year.

— Andrew Jones,

ETF Investment Product Manager at Vanguard

Total ETF assets in Australia passed $300 billion by the end of 2025, almost doubling in just over two years, from around $170 billion at the end of 2023.

“Australians are leaning into diversification, discipline and low-cost exposure, and ETFs are a practical way to do that,” Mr Jones added.

This response from investors is consistent with what Vanguard has seen in the past.

Market volatility is nothing new. History shows that those who ignore the emotional swirl of short-term market conditions and focus on long-term results tend to be rewarded for their patience and discipline.

Vanguard’s founder Jack Bogle himself said, “Stay the course. No matter what happens, stick to your program. I’ve said ‘stay the course’ a thousand times and meant it every time. It is the most important single piece of investment wisdom I can give to you.”