U.S.-listed sector ETFs pulled in a record $25 billion in July, according to a report from State Street Investment Management. Investors used a sharp technology selloff to load up on artificial intelligence-related stocks at lower prices.

Key Takeaways:

• Sector ETFs collected a record $25 billion last month, split between cyclical and defensive strategies.
• Nearly 90% of tech-classified funds posted losses in July, yet inflows still reached $19 billion.
• Financials swung to positive yearly flows, buoyed by earnings growth that topped 21% last quarter.

The haul arrived even as tech funds lost an average of 10% for the month. That’s a sign investors treated the pullback as a buying opportunity rather than a warning, wrote Matthew Bartolini, global head of research strategists at State Street Investment Management, in the firm’s monthly flows report.

July’s sector inflows split close to evenly between cyclical and defensive strategies, the report showed. Cyclical sectors added $3.8 billion, while defensive sectors added $3.5 billion.

Technology ETFs accounted for most of the sector total, collecting $19 billion in July alone, per the report. Year-to-date inflows for the sector have reached $63.5 billion. The State Street Technology Select Sector SPDR Fund (XLK) is among the largest funds tracking the group.

See more: S&P 500 Earnings Surge Puts Energy, Tech ETFs in Focus

Despite the drawdown, 89% of tech-classified ETFs posted negative returns in July, the report found. Still, 82% of those funds remain positive for the year, suggesting the pullback did little to shake investor conviction in the group.

Other Sector Funds Draw Interest

Financial sector ETFs added $3.4 billion in July, pushing year-to-date flows into positive territory at $1.7 billion, according to the report. The State Street Financial Select Sector SPDR Fund (XLF) is one of the more widely held funds in the category.

The gains followed a strong earnings season. Ninety percent of financial firms beat second-quarter estimates, with earnings growth topping 21%, the report said. Financials outperformed the S&P 500 by 7% over the trailing three-month period.

Supportive valuations and expectations for a lighter regulatory touch could keep drawing investors to financials in the months ahead, Bartolini wrote.

Health care ETFs added $2.2 billion in July, bringing year-to-date inflows to $3.2 billion, per the report. The State Street Health Care Select Sector SPDR Fund (XLV) is among the sector’s largest funds.

Health care money didn’t spread evenly across the sector, unlike the broader tech and financial gains. It was concentrated in biotechnology and pharmaceutical funds, the report noted. Dealmaking and drug pipeline progress helped those corners outperform the broader sector and market so far this year.

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