Investors are taking a Barbell Approach in the Near-term
The strongest flow signal is renewed accumulation of semiconductors and electrification despite weak returns. Investors are also selling selected software, housing and defensive rallies. Profitable AI suppliers have the strongest immediate earnings catalyst, while inflation and financing conditions continue to favor cash-generative, conservative exposure. We favor selective semiconductor and grid positions with a dividend-quality anchor.
| Theme / ETF | 1W return | 1W flow ($m) | 1M return | 1M flow ($m) |
| Semiconductors / SOXX | +0.14% | +5,321.7 | -10.76% | +4,305.5 |
| Semiconductors / SMH | +0.23% | +2,827.1 | -8.01% | +2,249.0 |
| Smart grid / GRID | -2.02% | +33.7 | -6.97% | +221.5 |
| Electrification / VOLT | -1.39% | +188.1 | -5.18% | +271.8 |
| Infrastructure / PAVE | -0.34% | +46.2 | -0.95% | +298.0 |
| Gold miners / GDX | -4.07% | +100.2 | -10.42% | +737.6 |
| Software / IGV | +2.72% | -396.7 | +5.44% | -255.1 |
| Minimum volatility / USMV | +0.62% | -10.1 | +4.79% | -331.7 |
| Homebuilding / ITB | +4.37% | -88.3 | +1.03% | -170.6 |
| Genomics / ARKG | +3.61% | -107.1 | -3.20% | +186.7 |
| Innovation / ARKK | -0.75% | +121.5 | -6.60% | -1,764.9 |
| Dividends / SCHD | +1.33% | +707.5 | +5.75% | +2,473.9 |
.csv data sourced from FactSet Research Systems Inc. Rolling periods in the October 28 snapshot; positive flows indicate inflows. Repeated tickers counted once; broad-market ETFs excluded.
Semiconductors show the largest mismatch between falling prices and incoming capital. SOXX and SMH attracted a combined $6.55 billion over the month and $8.15 billion last week. The week is included in the month: earlier redemptions have been more than reversed. AIQ and BAI also drew a combined $361.4 million despite monthly declines. Today’s SK hynix results lend fundamental support. The company has long-term agreements with 14 customers covering more than half of 2027-2028 production capacity. That improves demand visibility for the memory supply chain, although chip ETFs hold different combinations of suppliers and designers. [1]
Grid investment has the most consistent accumulation across both windows. GRID, VOLT and PAVE have losses and positive flows at both horizons. GRID and VOLT received $493.3 million over the month; VOLT’s inflow alone equals 28.5% of its current assets. ABB’s latest quarter showed 40% order growth and triple-digit data-center orders, supporting demand for power equipment. These remain volatile growth exposures. The power theme is selective: ICLN and NLR lost $66.5 million and $91.5 million over the month, while solar fund TAN gained $46.4 million despite falling 4.63%. [2]
Fading strength is clearest in software and homebuilding. IGV’s monthly gain came with redemptions, and its weekly withdrawal was larger still. ITB’s 4.37% weekly rally also failed to attract net creations. USMV shows a similar price/flow conflict. These patterns are consistent with investors reducing exposure into strength, rather than evidence that company fundamentals have necessarily deteriorated. Water offers another example: PHO and FIW gained 5.43% and 4.90% over the month while losing $4.5 million and $15.7 million.
Weekly changes challenge the durability of some monthly accumulation. ARKG attracted money during its monthly decline but lost $107.1 million as it rallied 3.61% last week. ARKK shows the opposite shift: the latest week’s $121.5 million inflow is small against $1.76 billion in monthly redemptions. Momentum fund SPMO also attracted $601.5 million despite losing 6.76% over the month. Several crypto-linked funds have less support. DAPP fell 24.64% over the month and lost $114.7 million. Robinhood’s 55% year-over-year decline in cryptocurrency transaction revenue adds a cautionary industry signal. [3]
Conservative allocations are receiving support, but investors distinguish dividend quality from minimum volatility. SCHD’s 5.75% monthly gain came with $2.47 billion in inflows; global infrastructure fund IGF rose 4.10% and gained $185.2 million. The contrast with USMV shows that the conservative allocation remains active even as individual defensive funds are redeemed. SCHD’s focus on fundamental strength and dividend sustainability fits an environment that still penalizes financing dependence. [4]
Current events support a selective AI rebound, while the broader macroeconomic advantage remains with financial resilience. Australia’s annual inflation accelerated to 4.3% from 4.0% in today’s release. Waller’s October 8 speech left further Fed hikes open, and the EIA continues to describe tight diesel markets. Sustained cheaper financing remains an uncertain assumption. Energy retains a hedge role: XOP is up 10.20% over the month with $194.4 million in inflows, while oil-services fund OIH has turned positive on weekly flows despite monthly redemptions. [5,6,7]
Our preference is selective exposure through SMH or SOXX and GRID or VOLT, alongside a dividend anchor such as SCHD. Before broadening into speculative innovation, we want hyperscaler revenue and backlog conversion to justify capital spending, plus evidence that funding pressures are easing. Today’s Fed decision and Microsoft’s after-close earnings remain unresolved at publication. Stronger cash generation would favor speculative exposure; renewed energy inflation or hawkish policy would strengthen the conservative case. [8]
Disclaimer: For informational purposes only; not personalized investment advice. Thematic ETFs can be volatile and concentrated.
Sources
[1] SK hynix Q3 results, October 28, 2026. SK hynix
[2] ABB Q3 results, October 20, 2026. ABB
[3] Robinhood Q3 results, October 27, 2026. Robinhood
[4] SCHD investment methodology, issuer disclosure. Schwab Asset Management
[5] Australia September CPI, October 28, 2026. Australian Bureau of Statistics
[6] Waller speech and FOMC calendar, October 2026. Waller October 8 speech; Federal Reserve calendar
[7] Short-Term Energy Outlook, October 2026. U.S. EIA
[8] Microsoft earnings schedule, October 28, 2026. Microsoft
