As volatility has risen in financial markets this week, investors are piling into money market funds and pulling money out of stocks and bonds, both taxable and tax-free.
The data in the chart above comes from Refinitiv Lipper, which also provides some more context that shows how investors are bracing for a worst-case scenario.
Within the category of equity funds, an exchange-traded fund that contains utility stocks had some of the biggest inflows of the week. The Utilities Select Sector SPDR XLU, -0.79% picked up $1.3 billion.
In contrast, the Financial Select Sector SPDR ETF XLF, -3.36% saw outflows of $1.4 billion, making it the second-biggest loser of the week. That’s likely because bond yields are so depressed: as investors flock to safe havens and respond to the Federal Reserve’s rate cut, it pushes prices higher and yields fall off a cliff. Banks make money when there’s a bigger differential between shorter interest rates and longer ones, and when rates overall are so low, they don’t have much wiggle room.
Investors also turned to safety within the fixed income category. The iShares 7-10 Year Treasury Bond ETF IEF, +1.01% attracted the most net new money of any taxable fixed income ETF, while the iShares iBoxx $ Investment Grade Corporate Bond ETF LQD, +0.68% lost $2.0 billion. Right behind that was a high yield bond fund from the SPDR family JNK, -1.23% , which lost $1.5 billion.