401(k) direct asset adjustments have surged fourfold as U.S. retail investors react to market uncertainty.
Increased purchases of MMFs, short-term bonds, gold, and European defense stocks.
U.S. physical gold ETFs saw $5 billion in net inflows over the past month.
European equity ETFs received $1.8 billion in inflows in February.
S&P 500 is down 4.13% YTD, while European indices are rising: Stoxx Europe 600 up 7.68% YTD, Germany’s DAX up 15.46% YTD
Opinion
As market volatility increases, retail investors are reducing exposure to risky assets and reallocating funds to safe-haven assets and European markets. The shift suggests growing concerns over the impact of Trump’s tariff policies on corporate earnings, prompting more defensive investment strategies.
Core Sell Point
With rising market uncertainty driven by tariff policy risks and weakening corporate earnings, U.S. retail investors are shifting funds into safe-haven assets and European defense stocks, signaling significant changes in global capital flows.
U.S. retail investors are pulling funds out of the domestic stock market and reallocating them into safe-haven assets and European defense stocks. Growing concerns over stock market declines, fueled by Donald Trump’s tariff policies, have heightened investor anxiety. Notably, the proportion of U.S. investors manually adjusting their retirement savings accounts, such as 401(k) plans, has surged fourfold compared to the usual levels this year, despite most being managed by robo-advisors.
Investors are shifting towards money market funds (MMFs), short-term bonds, and gold, while also increasing exposure to European defense companies. Concerns over potential cuts in U.S. security aid have prompted European countries to ramp up their own defense spending, driving up defense stock prices. In February alone, $1.8 billion flowed into European equity ETFs, while U.S. physical gold ETFs saw $5 billion in inflows over the past month.
Although the S&P 500 index rebounded on March 14, it remains down 4.13% year-to-date. Meanwhile, European stock markets continue to rise. Goldman Sachs has warned that each additional 5 percentage points in U.S. tariffs could reduce S&P 500 companies' earnings per share (EPS) by 1–2%. With additional tariff hikes expected next month, market volatility is likely to persist.
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