Group 1 - U.S. investors showed a cautious approach by investing approximately $104.75 billion into money market funds, marking the largest weekly net purchase since November 5 [1] - There was a net outflow of $3.52 billion from U.S. equity funds, indicating a second consecutive week of selling [2] - Mid-cap funds experienced a net outflow of $494.92 million for the seventh straight week, while small- and large-cap funds saw disposals of $1.18 billion and $476 million, respectively [2] Group 2 - Sectoral equity funds remained attractive, attracting around $510 million in net inflows, with industrials and gold and precious metals equity funds receiving inflows of $510 million and $293 million, respectively [3] - U.S. bond funds had a modest inflow of $314 million, the lowest since October 1 [3] - Short-to-intermediate investment-grade funds and municipal debt funds secured inflows of $1.45 billion and $737 million, while short-to-intermediate government and treasury funds faced a weekly outflow of $1.58 billion [4]

Core Insights - The Federal Reserve's recent interest-rate cut is expected to further stimulate the booming ETF industry [1] - Analysts predict that lower interest rates will lead to a shift of assets from money market funds to ETFs, particularly benefiting the financial services sector and fixed-income products [2][3] ETF Industry Impact - The money market fund industry, valued at $7.4 trillion, may become less attractive as interest rates decline, prompting investors to seek higher returns in ETFs [2] - Historical context shows that the money market industry was approximately $5 trillion when interest rates were last at similar levels in late 2022 [3] - A significant capital flow into ETFs is anticipated as the Fed continues to ease policy, although the transition may not be immediate [3] Financial Sector Trends - Early flows indicate a trend towards financial sector ETFs, with nearly $750 million entering these funds on the day of the Fed's decision [2] - The financial services sector typically outperforms the broader market during periods of rate cuts [2] Fixed-Income Products - Fixed-income products are expected to gain attention in a post-rate cut environment, especially as the yield curve steepens [3] - There is uncertainty regarding whether investors will favor short-term or long-term bonds, as rate cuts enhance the attractiveness of fixed-income products [3][4] - Traditional fixed income may not provide the expected stability against portfolio volatility, raising questions about its pricing and benefits [3] Market Dynamics - Since March 2022, money market assets have increased by over $2.5 trillion, with more than $320 billion gained in 2023 alone [5]