March 3 - Global investors increased allocations to money market funds on Tuesday as escalating conflict involving the U.S., Israel and Iran prompted a flight to short-term, low-risk assets. LSEG Lipper data showed U.S. money market funds recorded $30.75 billion of inflows, making them the largest recipient among major fund categories during the period as investors sought the preservation and liquidity those vehicles provide.
On a worldwide basis, money market funds drew $47.9 billion in fresh capital, the largest daily intake since February 17, when global money market funds attracted $48.2 billion. The surge in demand for cash-like instruments coincided with renewed interest in global bond funds, which also registered inflows as investors rebalanced toward lower-duration fixed income.
Other areas that saw positive flows included U.S. alternative equity leveraged funds - a broad grouping that encompasses private equity, hedge funds and leveraged ETFs that employ derivatives to amplify daily returns - which collectively took in about $1 billion. U.S. short-term bond funds and municipal bond funds likewise posted net inflows during the same session.
Commodities-linked equity groups were not universally shunned. U.S. natural resources equity funds, which include energy and mining companies, attracted capital as oil and gas prices rose following strikes by Israeli and U.S. forces on Iranian targets that disrupted energy facilities and shipping through the Strait of Hormuz.
By contrast, investor sentiment toward equities cooled. U.S.-focused equity funds experienced outflows totaling $9.6 billion, and both global ex-U.S. equity funds and U.S. technology sector funds recorded outflows in excess of $1 billion each. Overall, global equity funds posted an outflow of $9.1 billion on Monday - the largest single-day withdrawal in more than two months.
The pattern of flows reflects a broader repositioning toward liquidity and shorter-duration instruments amid heightened geopolitical risk, with differentiated demand across bond maturities and sector-specific equity groups.