Investors rushed into bond and fixed-income funds in the third quarter in anticipation of a rate cut by the U.S. Federal Reserve and concerns about whether the economy is headed into a recession.

Bond, mutual and fixed-income exchange-traded funds (ETF) attracted $119.1 billion in net inflows in the third quarter, up from $68.4 billion in net inflows in the previous quarter, according to Morningstar and Lipper data analyzed by YCharts.

Assets into money-market funds surged to $318.6 billion from $26.2 billion in net redemptions in the second quarter. In contrast, equity funds and ETFs suffered $1.9 billion in net outflows in the third quarter, compared with $14 billion in net inflows in the previous quarter, spurred by a steady withdrawal from mutual funds.

The third-quarter investment shift reflected a market environment beset with increasing volatility, favoring so-called safe-haven assets such as bonds and cash. The S&P 500 Index plunged 8.5% at the beginning of August, though it rebounded to an all-time high by the quarter’s close.

Meanwhile, investors increasingly tried to lock in yields on income-producing securities ahead of the Federal Reserve’s expected September interest rate cut. The Fed cut its benchmark rate 50 basis points (bps) in late September, its first rate cut since the Covid-19 pandemic.