Global Navigator | Investors caught in a thematic loop as August winds down

During the third week of August 2025, investors were trying to decide if the US artificial intelligence (AI) story was fact or had strayed into the realm of fantasy, debating whether or not the latest US inflation numbers undermined the case for an interest rate cut the following month, fretting about French fiscal indiscipline and weighing the chances of peace in the Middle East. A year later, investors are again focused on the economic viability of the AI rollout, a (different) conflict in the Middle East and the interplay of inflation, budget deficits and US interest rates.

As was the case a year ago, flows to EPFR-tracked mutual funds and ETFs did little to support the broader narrative of an exodus from US assets, with combined flows into US Equity, Alternative and Bond Funds totaling over $40 billion. But the latest week’s flows had a more pronounced anti-inflation flavor. Flows into Inflation Protected Bond Funds were eight times higher than they were this time last year, Physical Gold Funds posted their seventh consecutive inflow and Cryptocurrency Funds absorbed $981 million, a 15-week high.

While some ETFs hold several cryptocurrencies or combine bitcoin with more traditional asset like gold, the market remains largely dominated by single-stock funds. Bitcoin Funds account for a significant share of total assets and have attracted inflows in five of the past seven weeks. A similar trend is apparent among Ethereum Funds, the second-largest single-stock crypto group, which have recorded inflows in six of the past seven weeks. During the latest week, both groups absorbed their biggest inflows since late April. Ripple Funds have seen the most sustained investor interest, posting an 18th consecutive weekly inflow.