US Fund Flows Notch Another $100 Billion Month in August

August marked another strong month for long-term US funds, which attracted $100 billion in net inflows. While slightly below July's pace, August extended an unprecedented streak of five consecutive months with more than $100 billion in inflows. Investors continued favoring taxable-bond funds while also rotating toward inflation-sensitive strategies and alternative investments.  

For a complete view of fund flows in August, download the free US Fund Flows report. 

Long-term US funds amassed $100 billion of net inflows in August, extending their historic streak of reaching that threshold to a fifth consecutive month. Taxable-bond funds again accounted for the majority of those inflows, representing nearly 70% of the month's total. Commodities funds also enjoyed a standout month as investors sought additional protection against persistent inflation pressures.  

US equity funds posted a modest $2 billion inflow in August. While small, the result marked the category group's third consecutive month of positive flows and its fifth inflow over the past six months.  

Much of that strength came from large-growth funds, which attracted $9 billion. That was notable because it represented just the category's third monthly inflow in the past 15 months. At the same time, five of the remaining eight US equity categories recorded outflows, underscoring just how concentrated investor demand remained.  

Large-growth funds benefited heavily from flows into passive growth vehicles. The biggest contributor was Invesco QQQ Trust, which attracted roughly $18 billion in August, its strongest month of inflows in at least 15 years. Interestingly, that surge occurred even as investors pulled assets from many technology-focused sector funds.  

International-equity funds gathered $9 billion in August, reversing July's weakness and continuing a pattern of shifting investor sentiment. Foreign large-blend funds once again led the category group, while emerging-markets funds also contributed significantly to the month's inflows.  

Despite the stronger overall result, foreign large-growth funds continued to struggle, bringing their trailing 12-month outflows to roughly $54 billion. Meanwhile, diversified emerging-markets offerings remained an important source of demand across international equities.  

Taxable-bond funds attracted another $69 billion in August, their fourth consecutive month with inflows exceeding $60 billion. This marked only the second time on record that taxable-bond funds have achieved such a streak, with May through August 2020 representing the first occurrence.  

Investor demand remained especially strong for lower-duration investments. Ultrashort-bond funds attracted nearly $15 billion, making them the top Morningstar Category for inflows in consecutive months. Intermediate-core bond funds were a close second.  

Short Government Funds Have Their Best Month Since 2020 

One of the month's most notable fixed-income stories came from short government funds. The category attracted more than $9 billion, its second-largest monthly inflow on record and strongest result since March 2020.  

The category's 8.5% organic growth rate was also its highest since the pandemic-era surge, suggesting investors increasingly favored short-term Treasury exposure amid renewed inflation concerns and additional Treasury issuance on the short end of the yield curve.  

Several August trends pointed to investors preparing portfolios for potentially elevated inflation. Fueled largely by demand for gold-related strategies, commodities funds gathered $11 billion, their second-largest monthly inflow on record.  

Inflation-protected bond funds and short-term inflation-protected bond funds also enjoyed a strong month, combining to attract nearly $6 billion. Rising oil prices and persistent concerns about future price pressures likely contributed to the movement into these asset classes.  

After serving as one of the market's dominant themes for much of 2026, technology-focused sector funds finally experienced a reversal. Sector-equity funds lost more than $7 billion overall in August, marking the group's first monthly outflow since November 2025.  

Investors withdrew approximately $3 billion from technology funds, including many semiconductor-focused ETFs that had driven strong inflows during previous months. Financials funds also suffered notable withdrawals.  

One bright spot was healthcare. Healthcare-focused funds attracted roughly $2 billion, largely concentrated in biotechnology and genomics ETFs.  

Alternative strategies remained one of the strongest areas for organic growth. Several alternative-fund categories expanded assets by more than 20% over the past year, reflecting renewed investor interest in diversification strategies.  

Equity market-neutral funds led the way, posting an organic growth rate of more than 60%. Mult strategy, systematic-trend, long-short equity, and relative-value arbitrage funds also recorded strong growth, highlighting investors' willingness to explore alternatives beyond traditional stock and bond exposures.  

One of August's most notable asset-gathering stories came from Alger, which recorded its strongest month of inflows on record. The firm attracted approximately $2.5 billion of new assets, driven largely by Alger Concentrated Equity ETF and Alger AI Enablers & Adopters ETF. Together, those products accounted for more than 80% of the firm's August inflows.  

Investor demand remained strong north of the border as well. Canada-domiciled ETFs gathered CAD 44.5 billion in net inflows during the second quarter, following a record CAD 59.2 billion in the first quarter and pushing first-half inflows above CAD 100 billion.

Source: Morningstar Direct. Data as of June 30, 2026.

Equities continued to dominate allocations, attracting CAD 34.6 billion in Q2, or 78% of all ETF flows. Fixed-income ETFs brought in CAD 6.9 billion, while alternative strategies added CAD 2.2 billion.

Similar to trends seen in the US, Canadian investors showed a strong preference for US-equity exposure. US Equity was the top Morningstar category in Canada, attracting CAD 10.7 billion during the quarter. At the same time, asset-allocation ETFs continued gaining traction, accounting for 22% of quarterly flows as investors increasingly embraced diversified, all-in-one portfolio solutions.

To learn more about Canadian ETF flows, check out the full report.

Fund flows data offers a real-time window into how investors are positioning portfolios in response to changing market conditions.

August's data points to several important trends:

• Continued investor preference for fixed-income strategies, particularly ultrashort-bond and short-government exposures.  
• Growing demand for inflation-sensitive assets such as commodities and inflation-protected bonds.  
• Renewed interest in international equities, particularly emerging-markets funds.  
• Cooling enthusiasm for technology-sector investments after several months of strong inflows.  
• Accelerating adoption of alternative investment strategies.  

Advisors can use these insights to:

• Understand how investors are positioning portfolios amid inflation concerns. 

• Compare portfolio exposures against broader market trends. 
• Identify emerging areas of investor demand and potential concentration risks. 
• Prepare for client conversations around fixed income, international diversification, and alternative investments. 

Monitor overall market sentiment, research sector movements, and perform competitive analysis in Morningstar Direct, our investment analysis application.

Morningstar’s fund flows data covers more than 17,000 share classes and $23.5 billion in total net assets in the United States. Stay current on market trends with a comprehensive picture of collective investment trusts, money-market funds, separate accounts, open-end funds, and ETFs.

Direct offers daily snapshots as well as historical time-series data at monthly, quarterly, and annual frequencies.