* Assets in money market funds reach $8 trillion amid

Iran conflict

* Investors seek safety in cash due to oil price surge

and inflation fears

* Financial advisors warn against excessive risk aversion

in money market funds

By Suzanne McGee

PROVIDENCE, RHODE ISLAND, March 20 (Reuters) - As the

Iran conflict intensifies, the spike in oil prices and rising

inflation fears are spurring investors to ditch stocks as too

risky and shun traditional safe havens such as gold in favor of

money market funds.

The result: assets in those ultra-short-term and ultra-safe

Treasury funds are now hovering around $8 trillion, according to

calculations from providers such as the Investment Company

Institute, JPMorgan Chase and Crane Data, which specializes in

tracking money market flows. While their methodology varies and

precise calculations range from $7.8 trillion to $8.1 trillion,

the sources agree that assets have hit a record amid the

conflict.

"When you have times of dislocation and times of fear, cash

is the only thing that makes sense to a lot of people, because

there's the belief that you 'can't lose' by holding it," said

Malcolm Polley, director of strategic market analysis with

Stratos Investment Management, a wealth management firm. He

added that he is reassuring some of his clients that "the world

is not coming to an end just yet."

"This is the 'wait-and-see' money coming from investors who

are wary about what's happening right now," said Sweta Singh,

founding partner at money management firm City Different

Investments.

The latest catalyst for the steady flow of assets into money

market funds is the impact of soaring crude oil prices on the

economy and inflation. Brent crude futures rose 1.2% on

Thursday to $108.65 a barrel, after trading as much as 10%

higher during the day.

"Gold, silver and currencies are increasingly being driven

by oil" prices, said Steven Wieting, co-founder of CIO Group, a

wealth management firm. "As all risk assets take on this

uncertain path, dependent on oil, it is natural for cash to

build on the sidelines."

The longer prices linger at lofty levels, the greater toll

they will take on everything from consumer spending to corporate

earnings, market strategists are cautioning investors.

"There are few places to hide from this near-term supply shock,"

analysts at the BlackRock Investment Institute wrote in

a client note published on Monday. "Government bonds and gold

are not providing ballast as equities fall." Treasuries are no

safe haven either, given the potential for inflation to climb

further and already-high government debt to rise as the cost of

conducting the war mounts.

"The elephant in the room is stagflation," said Jacob

Taurel, managing partner at Activest Wealth Management, adding

that he believes this combination of inflation and stagnant or

negative growth is "a real risk."

To some, that offers a great case for putting money to one

side in a product that currently offers yields north of 3% and,

in a handful of cases, approaching 4%, depending on the

financial institution. In the first few days of the Iran war,

Deborah Cunningham, chief investment officer of global liquidity

markets at Federated Hermes, said in an analysis published

earlier this month that the "collective negative vibe often

sends investors to safer harbors," a category she told Reuters

includes money market funds.

Cunningham told Reuters she pegs the size of that cash

mountain in money markets at $8.3 trillion.

Financial advisors, however, are cautioning their clients

about being carried away by their risk aversion and putting too

much money into money market funds.

"The problem with going to cash is that you have to make two

separate decisions correctly: when to get into cash and when to

move back into other assets," said Polley.

"When people are scared, they can be irrational."