According to data from LSEG Lipper, there was a significant outflow of $15.64 billion from U.S. bond funds during the week ending April 9, marking the largest weekly withdrawal since December 21, 2022. The selloff was driven by concerns about a potential recession and worries that the escalating trade tensions between the U.S. and China could lead to inflation.

President Donald Trump's decision to increase tariffs on Chinese imports heightened anxiety in the market, with fears that Beijing might retaliate by raising its own tariffs, which it did by increasing tariffs on U.S. imports to 125%. This led to a substantial decline in U.S. Treasuries prices.

Although general domestic taxable fixed-income funds, short-to-intermediate investment-grade funds, and loan participation funds experienced significant net sales of $6.93 billion, $6.66 billion, and $6.51 billion, respectively, U.S. short-to-intermediate government and Treasury funds still received substantial inflows of $8.89 billion.

Investors shifted towards U.S. equity funds, injecting $6.44 billion during the week, a turnaround from the $10.83 billion in net sales the previous week. Large-cap funds attracted $17.71 billion while mid- and small-cap funds saw withdrawals of $1.9 billion and $1.43 billion, respectively.

Sectoral funds experienced net outflows of $4.73 billion, with financial sector funds leading the decline with a $2.05 billion withdrawal — the largest weekly outflow since April 2022. In contrast, U.S. money market funds faced outflows of around $26.67 billion after two consecutive weeks of inflows.

TD Securities suggested that as global market sentiment turned negative, investors with low-cost index funds may have viewed the downturn as an opportunity to buy, driven by a strategy of "buy and forget" and the belief that timing the market accurately is challenging.