July 2025 proved to be a compelling month for ETF investors, marked by a return to risk-on sentiment in some areas of the market, even as broader economic signals remained mixed. U.S. stocks saw a strong 2.2% rally, offsetting a decline in international markets.
Overall, the ETF industry demonstrated strength, with $121 billion of inflows in July. This pushed year-to-date total flows to an impressive $677 billion, keeping the industry on track for a record year. Total ETF assets reached an all-time high of $11.8 trillion during the month as well.
Notably, the risk-on behavior was not a uniform trend across all segments of the market. Cyclical sectors saw their largest inflows since January; however, U.S. small-cap funds experienced a record seventh consecutive month of outflows. This suggests investors are increasingly favoring specific themes and geographies that stand to benefit from unique catalysts.
For financial advisors looking to understand three distinct ETF categories that stood out for strong July performance, ethereum, cannabis, and Vietnam ETFs are worth exploring.
Rise of Ethereum ETFs
The cryptocurrency market, and specifically ethereum, had a breakout month in July. Ether (ETH) surged more than 35%, driven by legislative progress. President Trump signed the GENIUS Act into law, a development that, despite broader tariff-related market headwinds, provided a powerful tailwind for the digital asset. This legislative support and growing regulatory clarity for cryptocurrencies has significantly bolstered investor confidence in the space.
The performance of Ethereum ETFs in July was a direct reflection of this improved sentiment. ETFs such as the ProShares Ultra Ether ETF (ETHT), the Invesco Galaxy Ethereum ETF (QETH), and the VanEck Ethereum ETF (ETHV) saw a significant performance boost.
For advisors, the strong performance of these ETFs in July underscores the strong influence of regulatory developments in the digital asset space. While still a high-volatility area, the increasing institutional acceptance and clarity provided by legislation are creating a new class of investable products that can potentially offer uncorrelated returns to traditional equity and fixed income portfolios.
Cannabis ETFs Get a Regulatory High
Cannabis stocks, which have seen their share of volatility, also enjoyed a strong rally in July. The driving force behind this was news of cannabis rescheduling. The potential for the federal government to move cannabis from a Schedule I to a Schedule III drug would have profound implications for the industry. It would not only facilitate scientific research but also remove the significant tax burdens that have weighed on legal marijuana dispensaries. This could be revolutionary for the profitability and growth prospects of cannabis companies.
The positive news served as a performance driver for cannabis-focused ETFs. The Roundhill Cannabis ETF (WEED), the AdvisorShares Pure US Cannabis ETF (MSOS), and the Amplify Seymour Cannabis ETF (CNBS) all benefited from renewed optimism in the space.
The potential for further legislative reform, combined with a growing consumer market, suggests cannabis ETFs could continue to be an opportunity for growth.
Vietnam ETFs Shine Amid Shifting Global Trade
While U.S. stocks outperformed their global counterparts, a specific and often-overlooked market stood out: Vietnam. The Southeast Asian nation’s stock market rallied to a multiyear high in July.
Vietnam’s rally was primarily a result of shifting global trade dynamics. As the U.S. imposed higher tariffs on some Asian countries, Vietnam benefited from its position as an alternative manufacturing and trade hub. The country saw a surge in foreign direct investment and growing optimism that new trade flows would move away from China and toward Vietnam.
This macro trend provided a powerful impetus for Vietnam-focused ETFs. The VanEck Vietnam ETF (VNM) and the Global X MSCI Vietnam ETF (VNAM) were driven higher by these developments.
For advisors, understanding global macro shifts can be a key to identifying international opportunities. Vietnam's robust economic fundamentals and its newfound strategic advantage in global supply chains make Vietnam ETFs a compelling consideration for advisors seeking diversification and growth in emerging markets.
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