Fearing threats to the economy, investors have begun to shift capital into safe-haven assets. According to Bloomberg Intelligence, inflows into ETFs focused on gold, short-term bonds, and low-volatility stocks have reached their highest levels since March 2023.
Analysts estimate that these categories attracted $18 billion in April alone, with two-thirds of the funds flowing into cash instruments. Ryan Grabinski, senior investment strategist at Strategas Securities, notes that the uncertainty surrounding Washington’s policies is causing market participants to refrain from making significant decisions. At the same time, concerns about the Fed’s independence have triggered a sell-off in US stocks, the dollar, and long-term bonds, resulting in a 3% drop in the S&P 500.
Despite this increased caution, investors continue to allocate funds to products tracking major market indices. The iShares Core S&P 500 ETF, for example, attracted $35 billion over the month, indicating that some optimism remains among market participants, notes Cayla Seder, a macro multi-asset strategist at State Street Global Markets.