Investors are moving to safer investments amid market uncertainty

After years of risky investments, investors are now shifting some money toward safe-haven investments.

They are pouring cash into gold, ultra-short Treasury ETFs, and low-volatility stocks at the fastest pace since March 2023. They are acting amid growing concern that a global trade war represents a lasting threat to economic and earnings growth. 

Data compiled by Bloomberg Intelligence show these three groups saw about $18 billion in total inflows so far in April, with roughly two‑thirds flowing into cash‑like funds.

The SPDR Bloomberg 1‑3 Month T‑Bill ETF (BIL) attracted $8 billion this month, followed by the iShares Short Treasury Bond ETF (SHV) with $3 billion and the iShares 1‑3 Year Treasury Bond ETF (SHY) with $1 billion. 

Funds linked to gold have seen three straight months of gains, while low‑volatility equity ETFs have rebounded after nearly two years of outflows.

Investors poured $18 billion into safe funds in April. Source: Bloomberg

Risk‑off sentiment intensified on Monday when concerns over the Federal Reserve’s independence triggered a selloff in U.S. stocks, the dollar, and long‑dated Treasury bonds. The S&P 500 Index dropped 3% that day.

Trump’s warning to the Fed caused investors to rush into safe funds

President Donald Trump added to the mood, warning that the U.S. economy could slow if the Fed does not immediately cut interest rates. As a result, safe havens like the Swiss franc and the Japanese yen surged.

“The market is searching for policy clarity out of Washington, and it remains elusive,” said Ryan Grabinski, senior investment strategist at Strategas Securities. “Consumers, businesses, and even the Fed are hesitant to make major decisions because so much is unknown.”

Despite the risk‑off tilt, broad‑based index funds have continued to attract above‑average inflows. Leading the group is the iShares Core S&P 500 ETF (IVV), which pulled in $35 billion over the past month.

“We continue to see signs of caution but not panic,” said Cayla Seder, a macro multi‑asset strategist at State Street Global Markets. “At a high level, this looks like less flows going into equities and more demand for both fixed income and cash. All things considered, if hard data start to weaken, there’s more room to seek shelter.”

Elsewhere, investors are still chasing high risk, with shares outstanding among the top 50 leveraged ETFs by assets rising 20% since Trump’s so‑called ‘Liberation Day’ on April 2.

“The buy‑the‑dip mentality of investors remains,” said Mark Hackett, chief market strategist at Nationwide. “Despite near record levels of pessimism, retail investors continue to buy.”

 

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