Sector flows: Tech stumbles, biotech surges
Not every corner of the market participated equally. Sector ETFs bled $8 billion in August, driven by $6.1 billion of outflows from technology and $4.9 billion from financials, together accounting for 132% of all sector ETF outflows for the month.
Tech’s reversal was a direct follow-on to a record-setting July. The sector rallied nearly 6% in August, per Bloomberg Finance data, but that return failed to reignite the buying momentum that had defined the prior stretch.
For financials, the outflows were more puzzling: the sector posted strong earnings, and revenues were supported by a robust pipeline of IPOs, secondary offerings, and M&A activity. State Street suggested the move may reflect profit-taking after the sector outperformed the broader market by 6% over the prior three months.
Health care was the month’s brightest spot on the sector scorecard, drawing $2.2 billion as AI-assisted drug development narratives captured investor attention.
Biotech-focused ETFs alone accounted for 55% of the sector’s inflows, or $1.2 billion, as earnings season brought renewed focus on how AI may streamline R&D timelines and help larger pharmaceutical companies identify acquisition targets.