US investors kept leaning away from risk in August 2025 as they put $77 billion to work in mainly fixed-income open-end funds and exchange-traded funds. Taxable-bond funds led, with their largest inflows since April 2021, concentrated in defensive areas. Investors also continued to move into cash. Meanwhile, equity investors bolted from growth funds and emerging-market funds, despite continued rotation into international funds.
Taxable-Bond Funds Stay Hot
In August, taxable-bond funds experienced their largest monthly inflow since April 2021. Conservative categories like intermediate core bond and ultrashort bond led the way, each accruing over $10 billion in assets for the month. Corporate-bond funds experienced their largest monthly inflow since June 2020, with absolute yields remaining high. While 19 of the 23 fixed-income categories were in inflows, long-term bond funds shed assets for the sixth straight month, albeit to a smaller degree than months past, as investors remained wary of persistent inflation.
Record Inflows for Multisector Bond Funds
Multisector bond funds brought in their largest monthly inflow on record in August. Pimco Income’s nearly $200 billion of assets make up nearly half of the category’s net assets and often drive monthly flows for the category. Its August inflow of over $5.4 billion was a record high for the fund and made up nearly 60% of the category’s $9.5 billion net inflow. Over the past 30 months, the category has seen consistent inflows.
US Equity Outflows Persist in August, With Growth Funds Mostly to Blame
Investors have pulled nearly $87 billion out of US equity funds over the past four months as investors retreat from growth strategies, even as stock markets hit record highs. In August, 98% of the $11 billion in monthly net outflows came from growth funds, while in the past year, the retreat was even more pronounced. Investors yanked more than $100 billion from growth funds, about 3 times the outflows from value funds, and a stark contrast to the $217 billion of inflows into large-blend funds. Those funds are dominated by inflows into passive ETFs tracking the S&P 500.
Investors Show No Signs of Shaking the Gold Bug
As gold prices soared to record heights, investors continued to crowd into commodities-focused funds in August. These funds, which invest mostly in precious metals, gathered more than $6 billion in the month, pushing 2025’s haul to $31 billion. That’s the second most in the past 15 years and, at this rate, it could overtake 2020’s $44 billion record by year-end. Investors similarly moved $1.3 billion in August into precious-metals equity funds, like VanEck Gold Miners ETF.
Record Outflows From Defined-Outcome Funds Following Years of Inflows
Defined-outcome funds have enjoyed consistent inflows for years. However, investors changed course in August, pulling nearly $400 million from these funds. This was only the third month of net outflows for the category in the past five years, and the largest month of outflows for the category in its relatively brief history. Buffer ETFs from asset managers like Allianz and Innovator were responsible for most of the category’s outflows.
This article is adapted from the Morningstar Direct US Asset Flows Commentary for August 2025. Download the full report here.