Investors betting on a slowing economy, cooling inflation, and falling interest rates while shying away from high-flying mega-cap tech stocks were rewarded handsomely in July.

The long-term bond market proxy, the iShares 20+ Year Treasury Bond ETF (TLT) , jumped 3.6% last month while the stock market benchmark, the SPDR S&P 500 Trust ETF (SPY) , had a modest gain of 1.2%.

July’s market story is not just “risk-off,” but also one of market rotation in the equity space, as small-cap funds like the iShares Russell 2000 ETF (IWM) produced a massive gain of 10.3% in the month while big-tech ETFs like the Technology Select Sector SPDR ETF (XLK) fell 3.3%.

Why Long Term Treasury, Russell 2000 ETFs Won in July

The outperformance of both long-term Treasury ETFs and Russell 2000 ETFs in July can be attributed to changing investor expectations about interest rates and economic growth, as well as perceived high valuations for mega-cap technology companies. This led to a rotation of assets from large-cap growth stocks to safer havens and smaller, more cyclical companies.

Long-Term Treasury ETFs

Russell 2000 ETFs

Outlook: Long-Term Treasury, Russell 2000 ETFs

Here are potential scenarios to watch and consider for long-term Treasury ETFs and Russell 2000 ETFs in the coming months:

Long-Term Treasury ETFs