ETF fund flows for the month of January appear to be almost as confusing as the markets themselves.

As the S&P 500 lost 5.1% – the worst January performance since 2009 – and crude oil prices plummeted 9.2%, investors pulled $15.8 billion from equity ETFs – 80% from U.S. equity ETFs – but they added $1.08 billion to energy sector equity ETFs, according to State Street Global Advisors, which tracks SPDR ETFs and SSGA Funds.

“The fund flows into the energy sector have been pervasive over the last 16 months, even as the price of oil has fallen,” says David Mazza, head of research for SPDR ETFs and SGGA Funds. “Throughout all of 2015 investors tried to bottom fish energy stocks – a strategy that spilled over into the first month of 2016.”

These asset moves took place during a month when the correlation between stock prices and oil prices surged to 0.83, well above the 0.52 correlation throughout 2015, according to State Street Global Advisors. Some of the inflows into energy ETFs, however, were offset by a 2% increase in short interest in those ETFs, which now accounts for 23% of positions, down from the 38% average from 2012 to 2015, says Mazza.

He’s surprised by the continued flows into energy ETFs since markets were in “risk-off mode” in January with investors favoring defensive sectors such as utilities and short-term fixed income.

Much of the funds that was withdrawn from equity ETFs during January were reallocated into to fixed-income assets ($13.3 billion) but some made their way into commodities ($2.48 billion), primarily precious metals and energy.

Government bonds led the inflows in fixed income ($8.5 billion) followed by deposits into aggregate ETFs ($3.2 billion) — the category includes Treasuries, government agency bonds, mortgage-backed bonds and investment grade corporate bonds — and municipal bond ETFs ($741 million).

“Investors favored the perceived safety of the full faith and credit of the U.S. government relative to other areas of the market,” wrote Mazza, in a report released with the latest data.

But they favored ultra short-term ETFs, with average maturities less than a year, which led the inflows ($3.19 billion) and lost value because short-term rates rose in January, following the Fed’s interest rate hike in December – its first in almost 10 years. Since bond prices fall when rates rise and vice versa, ultra-short fixed income ETFs lost money in January.

Flows into short-term, intermediate and long-term ETFs were each around $1.7 billion, but only investors in the latter two profited since one-year rates were unchanged in January while 5- and 10-year rates fell substantially.

Another refuge that ETF investors sought in January was precious metals, including gold. “Much like the desire to seek out the comfort of U.S. Treasuries to ride out the choppy market waters, investors rotated into previous metal exposures – notably gold-backed ETFs – as a potential hedge against broad market volatility,” wrote Mazza. Gold prices rose about 5% in January and continue to appreciate, lifting gold-mining stocks, too. ‘Those stocks “are a leveraged play on the gold prices [and] having a better year than gold,” wrote Arne Espe, senior portfolio manager at USAA Investments recently. “The miners have shot up nearly 20% in the past two weeks.”

Among equity ETFs, only inflows into utilities ($916 million) approached the level of inflows into energy ($1.07 billion). Real estate, consumer staples and materials also saw inflows in January. Technology ETFs led the outflows ($2.68 billion) followed by financials ($2.46 billion and consumer discretionary ($1.79 billion). 

“Past winners were sold in favor of the more defensive areas of the markets such as utilities and staples,” wrote Mazza.

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