Investors Shift Into Risk-On Mode: Key Takeaways from US Fund Flows in April

Long-term US fund flows returned to recent form in April, taking in $120 billion in new assets and marking the 12th straight month of inflows. While it may seem like much of the same, a significant change in trend took place. Bond funds have carried inflows over the past year, but equity funds made a comeback across the board in April. Markets appeared to price in the resolution of the Iran war, luring investors toward higher-risk assets.

Large-Blend Whips Up a US Equity Rebound in April

US equity funds attracted $43 billion in April, driven almost entirely by flows into large-blend funds. That Morningstar Category took in $52 billion, its largest haul in the past five years. Unsurprisingly, passive funds dominated US equity inflows, at $76 billion, including $57 billion to large-blend and $19 billion to large-growth funds. Meanwhile, nearly $34 billion departed actively managed funds, including $18 billion from large growth, and about $5 billion each from large value and large blend.

Risk-On Rotation Drives Modest Taxable-Bond Inflows

Taxable-bond funds followed a lackluster $29 billion intake in March with a similarly underwhelming $38 billion intake in April. Investors’ risk-on sentiment was on display in the category group’s flows as credit-risky categories shone. High-yield bond led all fixed-income categories with nearly $7 billion in inflows. Following its worst month in years, the emerging-markets bond category brought in over $3 billion, its largest mark in almost a decade, with the bulk of it coming from a reallocation in Capital Group’s model portfolios. As global markets showed resilience, investors sought some extra yield.

Ultrashort Bond’s Streak of Inflows Comes Up Ultrashort

For the first time since March 2024, investors pulled assets out of ultrashort bond funds. Nearly $3 billion left the category, more than any other taxable-bond category and just one of five that experienced outflows for the month. This followed last month’s record inflow of over $24 billion, another reversion that reflected investors’ risk-on sentiment in April.

Record Tech Boom Rockets Sector Equity to Major Inflow …

Sector equity funds collected more than $18 billion in April, thanks largely to nearly $15 billion flowing into technology funds. It was a magical gathering for tech funds, the largest on record and nearly double the next-highest monthly flow in October 2025. On an organic growth basis, it was the largest since January 2018. Sector funds focused on semiconductor, memory, software, and artificial intelligence stocks all placed among the top flow winners in April.

… While Inverse and Leveraged Equity Investors Bet Against Tech

Contrary to technology-oriented risk-on moves elsewhere in April, inverse equity funds posted a $4 billion inflow, the category’s largest since January 2023, as investors added bets against semiconductor and other technology stocks. Meanwhile, more than $17 billion left leveraged equity funds as investors exited amplified bets on the same types of firms. That outflow, which easily took the record for the largest ever, represented an organic growth rate of negative 15%, the largest outflow since February 2014 on that basis.

This article is adapted from the Morningstar Direct US Asset Flows Commentary for April 2026. Download the full report here.