The question of when the vast sums spent by major technology companies on artificial intelligence will translate into new revenue weighed on several fund groups during the first week of January, with Technology Sector Funds posting a third consecutive outflow for the first time since late February, US Equity Funds starting the New Year with an $18.9 billion outflow and both Korea and Taiwan (POC) Equity Funds experiencing above average redemptions.
Investors carried their appetite for diversified geographical exposure into 2026. Global Equity Funds recorded their biggest inflow since 1Q22, Global Bond Funds attracted fresh money for the 27th time over the past 28 weeks, Global Emerging Markets (GEM) Equity Funds extended their longest inflow streak since 1H21 and GEM Bond Funds tallied their 33rd inflow since the beginning of May.
With excessive government borrowing and the threat of fiscal dominance a concern for many investors, funds dedicated to two alternatives – physical gold and digital assets – started the year with solid inflows. In the case of Physical Gold Funds, they recorded their ninth consecutive inflow while Cryptocurrency Funds, which struggled during the final quarter of last year, snapped a three-week run of outflows.
Overall, the week ending Jan. 7 saw a net $12.5 billion flow into all Bond Funds while Balanced Funds absorbed $1.9 billion, Equity Funds $2.2 billion, Alternative Funds $5 billion, and Money Market Funds $148.4 billion. Over a third of the headline number for Money Market Funds was attributable to Europe MM Funds which chalked up their largest inflow since EPFR started tracking them in 1Q07.
At the asset class and single country fund levels, Leveraged Equity Funds posted their biggest outflow in over four months, flows into all Bear Funds climbed to a 10-week high and flows into Equity Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates hit their highest weekly total since the first week of May. Australia Bond Funds saw a 33-week inflow streak come to an end, Netherlands Equity Funds posted their second largest outflow since mid-4Q22, and Philippines Equity Funds recorded their biggest inflow in over four years.
Emerging Markets Equity Funds
Diversified rather than single country funds anchored the headline number for all EPFR-tracked Emerging Markets Equity Funds during the first week of January as the overall group recorded its 11th consecutive inflow and 19th over the past 20 weeks. While Global Emerging Markets (GEM) Equity Funds absorbed over $2.5 billion, the biggest inflow recorded by a single country fund group was the $298 million absorbed by mainland-China mandated funds.
Retail share classes absorbed fresh money for only the seventh time over the past 12 months, but Dividend Equity Funds tallied their biggest outflow in over 14 months, funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates extended their longest redemption streak since mid-4Q24, and Leveraged EM Equity Funds saw another 3% of their AuM flow out.
Latin America Equity Funds started the year with a modest outflow as investors digested the US’s military strike on Venezuela to capture and extradite its president, Nicolas Maduro. Funds dedicated to Brazil, which shares a more than 1,400-mile border with Venezuela, posted their biggest outflow since the third week of April.
US intervention, and its impact on global oil prices and supply dynamic, also prompted a reassessment of the outlooks for many EMEA markets which include major oil producers (Saudi Arabia, Russia, Nigeria, the Gulf States) and major importers such as Poland, Turkey and Israel. Flows into all EMEA Equity Funds climbed to a 27-week high as expectations that events in Venezuela potentially increase supply to an amply supplied global oil market saw flows to Turkey, Israel and Poland Equity Funds hitting levels last seen in early 3Q25, late 1Q21 and mid-2Q13, respectively.
The first week of January also saw another EMEA market, Bulgaria, officially join the Eurozone, becoming the currency bloc’s 21st member. Although dedicated Bulgaria funds are thin on the ground, EPFR’s country flow data captures the “convergence” positioning from diversified funds in anticipation of Bulgaria’s adoption of the euro.
Among the Asia ex-Japan Country Fund groups, China Equity Funds posted modest inflows that were in the same ballpark as those recorded by GEM ex-China Equity Funds, while redemptions from Korea Equity Funds hit their highest total since mid-June and Indonesia Equity Funds recorded their sixth consecutive inflow.
Developed Markets Equity Funds
In contrast to their emerging markets counterparts, EPFR-tracked Developed Markets Equity Funds started the New Year with a modest outflow as flows into Global, Europe and Canada Equity Funds failed to offset redemptions from US and Asia Pacific Equity Funds.
The largest of the major diversified Developed Markets Equity Fund groups, Global Equity Funds, chalked up their largest inflow in nearly three years with investors committing $3 to funds with fully global mandates for every $1 they committed to Global ex-US Equity Funds. Europe-domiciled funds took in more fresh money than funds based in the US for the first time since the week ending July 2 last year.
Europe Equity Funds also recorded a solid inflow during the week ending Jan. 7, with the bulk of the latest inflows going to Switzerland Equity Funds and the two major regional fund groups. Once again, France, UK and Germany Equity Funds posted outflows, with the latter again hit by doubts about the pace and scope of the country’s rearmament and infrastructure investment stories. Analysis of data provided by sister company CEIC shows that Germany’s military spending has soared over the past 18 months, but much has gone to imports rather than domestically produced arms and ammunition with Italy, the US and Italy the major beneficiaries.
US Equity Funds recorded inflows across all capitalizations and styles in early January as investors digested multiple forecasts for the world’s biggest economy. Many of those forecasts predict another good year for corporate growth and profits but a tougher one for job seekers and small businesses. Flows to overseas domiciled US Equity Funds climbed to a 14-week high.
The slowing momentum in flows to major Asia Pacific Fund groups during the final weeks of last year carried into January, which kicked off with Australia, Japan and Pacific Regional Funds all posting outflows ranging from $91 million to $251 million. Redemptions from Australia Equity Funds, which enjoyed record-setting inflows during 2025, jumped to a 28-week high as policymakers grapple with sticky inflation and China hitting the country’s beef exporters with new tariffs.
Global sector, Industry and Precious Metals Funds
With another fourth quarter US earnings season around the bend and US President Donald trump’s administration shaking up global oil markets with tariffs and its strike on Venezuela, sector-oriented investors had plenty to chew on during the first week of 2026. Against this backdrop, flows into both Energy and Industrials Sector Funds exceeded $1.4 billion, Healthcare/Biotech Sector Funds absorbed $2 billion, and Commodities Sector Funds topped it off with an inflow of $3 billion.
For Energy Sector Funds, it was the biggest inflow since mid-4Q23 with four funds pulling in $100-200 million and a single ETF benchmarked to the S&P Energy index adding over $450 million. Two of those were thematic, focusing on oil services and uranium. During 2025, the first half of the year saw just a single weekly inflow, but the group fared better in the second half and closed out the year with 13 inflows over the final 16 weeks.
Market skepticism around an AI bubble is evident, with flows to AI related funds flattening over the past few weeks and all Technology Sector Funds posting outflows five of the past six weeks. The total AuM for Artificial Intelligence & Robotics Funds doubled in size during 2025, going from $78 billion to over $130 billion, marking the largest yearly increase on record. Assets stood close to $16 billion in 2017, doubled in the next year, hit nearly $34 billion in 2019 and shot up to $58 billion in 2020.
While flows for AI related funds soften, another thematic tech group has been gaining momentum. Humanoid Robot Funds provide investors with exposure to companies developing adaptable machines built to perform human tasks – different from the traditional robots designed for a specific task – drawing on technologies like AI, advanced sensors, and large language models to operate in the real world. The group has posted just three outflows over the past three quarters.
EPFR-tracked Industrials Sector Funds racked up a 16-week high inflow, with eight of the top 15 funds with the biggest inflows this week tracking aerospace, defense, or space exploration.
Bond and other Fixed Income Funds
Having recorded inflows 49 of the 52 weeks during 2025, EPFR-tracked Bond Funds started 2026 by absorbing over $11 billion. The headline number was capped by the reversal of recent strong flows into China Bond Funds and significant redemptions from Developed Asian Country Fund groups.
At the asset class level, investors continue to pile into Municipal Bond Funds, with the latest week’s net inflow the 32nd since the beginning of May and the biggest in nearly four months. Total Return and High Yield Bond Funds also attracted over $2 billion, flows into Green Bond Funds hit a nine-week high, Ultra Short-Term Bond Funds tallied their 49th inflow over the past 12 months and Inflation Protected Bond Funds posted their third outflow during the past five weeks.
The latest headline for all Emerging Markets Bond Funds was dominated by the redemptions from mainland China-mandated funds which set a new outflow record. The same funds dedicated to top rated corporate debt issued to support technological innovation that attracted record-setting sums in late December topped the list of funds experiencing the heaviest redemptions. Elsewhere, flows into EMEA Bond Funds came in a 13-week high as Turkey Bond Funds recorded their biggest inflow in over 11 months and South Africa Bond Funds took in fresh money for the 11th time during the past 14 weeks.
US Bond Funds enjoyed solid inflows despite the threat of another government shutdown at the end of the month and uncertainty about the US Federal Reserve’s willingness to keep cutting interest rates. The shutdown threat has been eased by recent bi-partisan efforts in the House of Representatives to pass spending bills that push the deadline to September. Overseas domiciled funds extended an inflow streak stretching back to late June but flows, which peaked in mid-August, have steadily lost momentum since then.
Flows to Europe Bond Funds were subdued with redemptions from UK and Switzerland Bond Funds hitting four and 16-week highs, respectively. Over the past 12 months Europe Bond ETFs have taken in more than twice as much fresh money as actively managed funds, helping to lift their share of all Europe Bond Fund assets under management from 13.4% at the end of 2024 to 14.8%.
Asia Pacific Bond Funds stumbled in early 2026 as Australia Bond Funds posted their first outflow since early May and Singapore Bond Funds their biggest on record.
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