Risk aversion rises, bond ETFs attract 21.5 billion yuan against the trend

Securities Times Fund Research Institute Li Mingzhu

In the past week (March 23 to 27, the same below), the A-share market underwent a noticeable change in the trajectory of capital flow under the dominance of risk-averse sentiment. ETF data shows that the market exhibited a pattern of “abandoning stocks for bonds and internal repositioning”: a total of 21.5 billion yuan flowed out from stock and commodity ETFs, shifting into lower-risk bond ETFs. Multiple public fund institutions pointed out that although short-term fluctuations are driven by risk-averse sentiment, the mid-term logic and valuation recovery prospects of A-shares still exist, and investors are positioning themselves around safety, low valuation, and certainty.

Bond ETFs become a “safe haven”

In the past week, the overall market ETFs displayed a differentiated pattern of “increased shares, reduced scale.” Wind data shows that the total shares increased by 7.352 billion, but due to market adjustments, the total scale shrank by 55.507 billion yuan, down to 5.04 trillion yuan; during the same period, the overall market ETF trading volume also decreased by 31.746 billion yuan, indicating a decline in market activity.

Bond ETFs became the “main battlefield” for capital inflows last week. Wind data indicates significant inflows into varieties such as sci-tech bonds, short-term financing bonds, urban investment bonds, and national development bonds, with related ETFs occupying the top spots in net inflow rankings. Among them, the sci-tech bond ETF from Harvest saw a net inflow exceeding 6 billion yuan in a single week, while the short-term financing bond ETF from Haifutong also exceeded 4 billion yuan in net inflow, highlighting the stable “ballast stone” property of bond assets amid market volatility, fulfilling institutions’ strong demand for risk aversion.

In stark contrast, gold and some equity ETFs faced concentrated outflows. Several gold ETFs experienced significant net outflows simultaneously, with the Huadian gold ETF alone seeing a net outflow of 3.873 billion yuan in a week, and the total outflow of similar products approaching 10 billion yuan, reflecting the market’s cautious stance on the short-term gold price trend. Within equity ETFs, capital attitudes also showed differentiation, with some broad-based and thematic ETFs also experiencing outflows.

Within equity ETFs, the flow of funds exhibited a significant structural differentiation. The A500 ETF from Huaxia, representing mid-cap core assets, saw a net outflow exceeding 2.6 billion yuan, and mainstream broad-based index ETFs like the SSE 50 and CSI 1000 also faced capital outflows. In contrast, the CSI 300 ETFs from Huaxia Fund and Huatai-PB Fund recorded net inflows, indicating that even in an environment thick with overall risk-aversion sentiment, some funds still chose to concentrate on large-cap blue-chip styles, seeking more certain and liquid defensive allocations.

Risk aversion and defense become the main themes

This trend of “bonds advancing while stocks retreat and internal differentiation” clearly points to the core logic of the current market dominated by risk-averse sentiment.

Firstly, the withdrawal of funds from gold and some equity assets is a direct signal of reduced risk appetite. Even gold, traditionally regarded as a “safe haven,” has experienced significant outflows amid high prices and increased volatility, showing that some investors chose to take profits and are cautious about the short-term price movement of gold. More significantly, broad-based ETFs, which represent the market’s backbone (like the CSI A500 ETF), also saw notable net outflows. Such products are typically viewed as tools for deploying into the overall resilience of the equity market, and the withdrawal of their funds clearly conveys investors’ cautious attitude towards the short-term profit outlook and overall rebound momentum of the equity market.

Secondly, the large-scale inflow into bond ETFs is a concentrated embodiment of actively pursuing defensive strategies. In the context of recent market sharp declines, high-quality government bonds and high-grade credit bonds have become the preferred “safe havens” for funds seeking stability.

Thirdly, the internal differentiation within equities also corroborates the risk-averse logic. While the CSI 300 ETF saw net inflows, the A500 and CSI 1000 ETFs faced net outflows, indicating that even the funds remaining in the stock market have a highly contracted risk appetite, concentrating on large-cap blue chips viewed as “safe havens.”

The long-term logic of A-shares remains unchanged

An equity fund manager from South China stated that during this round of market correction, bottom-fishing funds are positioning themselves around three core principles: “safety, low valuation, and certainty.” The current core logic of market trading is still dominated by risk-averse sentiment, but expectations for easing geopolitical tensions are beginning to form. Once the external environment becomes clearer, the market’s trading logic is expected to gradually shift from “risk-averse dominance” to the “risk appetite recovery” phase. Investors can patiently wait for related sectors to stabilize and for trading volumes to gradually recover before reallocating to seize mid-to-long-term valuation recovery opportunities.

Invesco Great Wall Fund believes that the mid-term logic of the market remains unchanged. The underlying logic of the current revaluation of Chinese assets is, on one hand, the reconstruction of the international order and the weakening of dollar hegemony; this round of geopolitical conflict is likely to reinforce the logic of weakening dollar credit; on the other hand, the trend of the AI industry brings progress in productivity, driving growth in many sectors, and China has achieved innovative breakthroughs in many fields. As the situation gradually calms, the market will ultimately return to its own logic.

Wells Fargo Fund believes that in the short term, the conflict between the US and Israel remains central to global asset pricing, and global equity assets, including A-shares, may continue to fluctuate until the geopolitical situation becomes clearer. If the situation remains volatile, the market may continue to oscillate; if the conflict substantially cools, A-shares may welcome a new allocation window in a more stable external environment. First, the logic of a long-term bullish trend for A-shares has not changed; second, under the current policy tone, the entry of stabilizing funds into the market is still expected, and there is a need to embrace “bottom-line thinking”; third, as the country with the most complete global industrial system, China still possesses the advantage of “safe asset premium,” and its resilience remains.