Investors continued to pour money into U.S. funds la♓st month despite it being the market’s most volatile month in🤪 years. 

U.S. exchange-traded funds attracted $70 billion in August, according to Morningstar Direct data. August's haul represented a downshift from July when funds raked in $117 billion, the second-highest monthly total on record. Still, last month’s intake was about five times ETFs’ haul in August 2023, according to Bloomberg Intelligence.

Investors’ enthusi෴asm for ETFs has put this year on track for a year of record i🉐nflows.

ETFs Attract Cash Despite Volatile August

Inflows held up despite 澳洲幸运5开奖号码历史查询:an exceptionally volatile month on Wall Street. The S&P 500 tumbled 6% in the first three sessions of August as markets reacted to 澳洲幸运5开奖号码历史查询:unsettling labor market data and a shift in the global interest rate outlook that 澳洲幸运5开奖号码历史查询:sunk stocks around the world. Then, as economic fears subsided and Wall Street digeꦉsted a slew of earnings reports, stocks rebounded to finish the month slightly higher. 

All the turbulence did little to temper investors’ appetite for 澳洲幸运5开奖号码历史查询:blended products, which continued to attract the majority of inflows to equity ETFs. The Vanguard S&P 500 ETF (VOO) and iShares Core S&P 500 fund (IVV), with their low fees and ample liquidity, raked in about $8 billion and $6 billion, 🅠respectively, last month.

Vanguard’s fund has now attracted more than $61 billion this year, giving it a substantial buffer to exceed the annual inflow record of $51👍 billion.

The market’s unease did change where investors funneled their money. Value-focused stock funds pulled i✤n more money than ♍growth funds for the first time all year.

Volatility also boosted a relatively obscure corner of the market: buffer ETFs, which use options to limit downside risk (and upside potential). Average weekly net inflows to this category have jumped to $283 million since the start of July from $160 million in the first half of the year. 🔯In the week that ended August 2—a week that included a Fed rate decision, a surprise rate hike by the Bank of Japan, and 🐈a U.S. jobs report—inflows totaled $360 million. 

With the U.S. presidential election and the Fed’s long-awaited interest rate cuts just around the corner, there’s likely to be more volatility in the coming months, which could drive more money 💟into these cautious bets on equities. 

Bond Funds Swell With Rate Cuts on Horizon

澳洲幸运5开奖号码历史查询:Fixed-income funds saw relatively larger inflows as investors prepared their portfolios for interest rate cuts. Bonds ETFs attracted $31🔯 billion, about as much as flowed to equity ETFs, even as the size of the equity ETF universe is about three times that of bonds. Seven of the 10 ETFs with the largest monthly inflows were fixed-income funds.

Market participants became increasingly confident throughout August that the Federal Reserve would 澳洲幸运5开奖号码历史查询:cut the federal funds rate ꦰin September, its first policy rate reduction in more than four years

Subsequently, the iShares 20+ Year Treasury Bond ETF (TLT), a bet on long-term rates that slumped more than 30% in 2022, pulled in nearly $5 billion, twice that of the bond fund with the next-highest inflows.