April Highlights
- Large cap ETFs returned to market highs after projected earnings surge.
- Technology ETFs had a MTD return of nearly 25% led by semiconductors and tech infrastructure. Software continues to slide.
- Retail net buying declines as investors look for a surgical, more thematic approach in April.
The State of the Market
After a shaky few months, April returned markets to all-time highs. While geopolitical and macro factors such as high oil prices and consumer sentiment point towards a negative outlook, fundamentals are exceedingly strong. Earnings rose almost universally across the board, and prices responded. U.S. large-cap stocks, particularly in technology, saw a resurgence after cooling off, with top-performing funds concentrated in plays backed by strong fundamentals. For example, even with a nearly 40% return in April, the PHLX Semiconductor™ Index’s P/E ratio only grew by 1% year to date. In contrast, despite worse performance, the S&P Small Cap 600’s P/E ratio has increased by nearly 8% YTD. Earnings growth was concentrated in large-cap securities and was reflected in performance. In April, U.S. equities outperformed international markets, with technology returns exceeding 20%.
Fixed income is still experiencing healthy inflows, while money market funds have seen a slight amount of outflows. Mild selling in money market funds suggests that investors are becoming more comfortable with other investments and may be moving money from the sidelines back into the market, or at least are no longer continuing to park funds on the sidelines. Cryptocurrency is also slowly picking up steam; after a period of downturn, it has finally posted a positive month, and investors are beginning to respond. Historically, bitcoin has behaved similarly to a leveraged technology play, and its concurrent rebound alongside the technology sector continues to support that narrative.
Option Overlay Strategies in Volatile Markets
April was the best month for U.S. large-cap ETFs in over five years. The median monthly performance for U.S. large-cap ETFs typically sits just above 2%, but this month returned 10%. In periods of sideways or downward market movement, option overlay strategies can offer advantages. Hedging strategies help protect principal during downturns, while enhanced income funds can provide an income boost in flat or declining markets. However, the premiums associated with these strategies can create a drag during bull markets. Investors also tend to be reactive when utilizing option overlay strategies—during upward markets, they slightly favor enhanced income strategies, while in downturns, hedging strategies dominate, showing 4.3% higher organic growth than in typical months.
Hardware vs. Software
Overall, technology had an excellent month, with ETFs in the category delivering a weighted return of over 24%. However, a closer look reveals that this performance is being driven almost entirely by hardware, while software continues to struggle. Segments such as semiconductors and technology infrastructure have seen an exceptional start to 2026, with semiconductor funds more than doubling in size alongside returns of nearly 60% year to date. On the other hand, as AI continues to erode traditional IP moats, areas like the digital economy, cybersecurity, and fintech are finding it difficult to establish their footing in a rapidly evolving landscape. In recent years, investors have been conditioned to “buy the dip,” but behavior now appears to be shifting, with more decisive reactions in weaker segments. Fintech and cybersecurity ETFs, for instance, have experienced both outflows and negative returns. While the technology sector overall is showing strong momentum, gains remain highly concentrated in a narrow set of themes, primarily those focused on infrastructure and physical technology.
The U.S. Retail Report
April 2026 was a month defined by less capital deployment but stronger conviction. Self-directed retail investors continued to pull back on net buying; however, the capital they did deploy was highly concentrated in semiconductors, AI, technology, and crypto, while they aggressively exited energy, commodities, and broad passive large-cap exposures. The “buy everything” mentality seen in January shifted toward a more targeted, thematic approach in April.
Retail investors demonstrated stronger conviction in specific sectors compared to the broader market, with net buying share remaining firmly positive in semiconductors (6.9%), technology (3.7%), and U.S. small caps (2.7%) firmly positive, even as total ETP market net cashflows for semiconductors and U.S. small caps flipped negative. This highlights retail's continued risk appetite in high-growth areas, while non-retail money shifted toward large caps.
Retail investors demonstrated stronger conviction in specific sectors compared to the broader market, with net buying share remaining firmly positive in semiconductors (6.9%), technology (3.7%), and U.S. small caps (2.7%) firmly positive, even as total ETP market net cashflows for semiconductors and U.S. small caps flipped negative. This highlights retail's continued risk appetite in high-growth areas, while non-retail money shifted toward large caps.
U.S. Large Cap & Energy See Monthly Retail Decline
U.S. large cap blend in particular showcased this sharp contrast with retail share dropping over 7 percentage points from March while non-retail share of net buying increased by 30 points.
The intense trading activity of precious metals that dominated early 2026 (with $5.6 billion in the first two months) was fully unwound. April saw continued net selling of a combined $111 million of precious metals in the commodities and hot sauce categories.
Overall, despite the Middle East tensions in April that temporarily spiked oil prices, retail’s broader concerns over delayed rate cuts and slowing global economic growth ultimately outweighed geopolitical supply fears, leading to profit-taking in the energy sector.
Small/Mid Cap ETFs Keep Up Steady March
U.S. small and mid cap ETFs have shown a strong, consistent upward trend in cumulative retail net buying from January 2025 through April 2026 with net buying growing from nearly $1B at the start of ‘25 to $12B by April ’26, representing sustained demand for this segment.
In particular, U.S. small cap value showed remarkable growth from $147M to $2.16B signaling the "value rotation" is real. The fact that previously negative categories (small cap growth, mid cap value) finally turned positive in April 2026 suggests a broadening of retail enthusiasm beyond just blend and value styles amid a sign of improved risk appetite.
Retail investors have moved beyond the initial "tariff hedge" trade and now view the entire US small/mid cap space favorably, supported by reshoring tailwinds and a year of demonstrated resilience in domestic-focused equities.
US Regional Investments Remain Below Average
Recently, commentary around regional investment has varied by the month depending on the most recent up or downswing in regional buying. Taking a longer term view, U.S. investors are buying U.S. based ETFs at a slightly lower rate than they have in the past. 2023 to the first half of 2025 was marked by much higher than typical buying of U.S. ETFs. Since the highs of 85%+ in 2023, investors have steadily lowered their U.S. exposure by buying global funds. It is important to note that the largest regional exposure of global funds, unless specifically excluded, tends to be the U.S. While U.S. investors are lowering their U.S. exposure, they have almost entirely ceased buying regional funds that focus on Europe or Asia and ex-US ETFs have never been able to gather comparable assets to global funds. Global funds are subsuming ex-US regional flows. The long term downtrend of U.S. exposure has been slightly couched as around two thirds of all assets flowing into global funds find their way back into U.S. listed securities.
New Kids on the Block
U.S. Filing Trends
There were 223 filings this month led by Defiance with 27 filings primarily for single stock funds. 51% of all filings were applied leveraged or inverse exposure.
The iShares Nasdaq 100 ETF and State Street SPDR Nasdaq 100 ETF were filed by Blackrock and State Street expanding the issuers that license the Nasdaq-100. They will join Invesco as the only U.S. issuers with a delta-one Nasdaq-100 ETF.
While the first batch of ‘prediction’ ETFs were temporarily delayed by the SEC, issuers are going full steam ahead. There were 17 prediction filings from Defiance, Bitwise and Roundhill ranging from moonshots on single stocks to increases in tech layoffs. The majority are using Kalshi contracts with a binary payout. Based on the range of contracts on prediction markets like Kalshi this is likely only the beginning of the trend.
Unique Single Stock Filings are Slowing
Single-stock ETF development has accelerated significantly since the first products were filed in 2022. The number of unique underlying equities referenced in filings has expanded to nearly 700 names by 2026, while only 218 unique stocks have a launched product. The widening gap between filings and launches suggests issuers continue testing product concepts at a faster pace than products are ultimately brought to market. Although overall product launches continue to grow, expansion into new underlying equities has slowed. A larger share of recent filings are tied to additional implementations built around existing single-stock ETF names, including inverse, income-oriented, and options-overlay structures. Issuers appear to be deepening coverage of stocks that already demonstrate elevated trading activity and retail engagement rather than broadening the universe.
Disclaimer:
Information set forth in this communication contains forward-looking statements that involve a number of risks and uncertainties. Nasdaq cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. Forward-looking statements can be identified by words such as “will,” “believe” and other words and terms of similar meaning. Forward-looking statements involve a number of risks, uncertainties or other factors beyond Nasdaq’s control. These risks and uncertainties are detailed in Nasdaq’s filings with the U.S. Securities and Exchange Commission, including its annual reports on Form 10-K and quarterly reports on Form 10-Q which are available on Nasdaq’s investor relations website at http://ir.nasdaq.com and the SEC’s website at www.sec.gov. Nasdaq undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
Nasdaq® is a trademark of Nasdaq, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither Nasdaq, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies or Nasdaq proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.
© 2026. Nasdaq, Inc. All Rights Reserved.
Latest articles
This data feed is not available at this time.
Data is currently not available