On the surface, the third week of October was another good one for EPFR-tracked mutual funds and ETFs. Bond Funds took in another $17.2 billion and remained on track to set a second consecutive full-year inflow record, Equity Funds collectively absorbed $14.1 billion and Alternative Funds posted their third largest weekly inflow in over two decades.
Behind the headline numbers, however, the latest flows showed a further reduction in risk appetite as global equity markets continue to be whipsawed by US policy shifts, geopolitics and concerns about the health of less regulated corners of the financial system. Bank Loan and High Yield Bond Funds posted consecutive weekly inflows for the first time since mid-April while Cryptocurrency, Mortgaged Backed and Collateralized Obligation (CLO) Bond Funds saw inflow streaks of eight, 25 and 26 weeks, respectively, come to an end. Meanwhile, Physical Gold Funds attracted record-setting inflows.
US asset classes continue to pull in fresh money, with US Equity, Bond and Money Market Funds pulling in a combined $54 billion, and there was plenty of conviction at the sector level with all 11 of the major EPFR-tracked Sector Fund groups posting inflows. That is the first time this has happened in over four years.
At the single country and asset class fund levels, flows into China Money Market Funds climbed to a seven-week high. Slovak Equity Funds posted their biggest inflow since the third week of January and Chile Bond Funds absorbed fresh money for the 29th week running. Investors steered over $700 million into Convertible Bond Funds, added to Total Return Bond Funds current run of inflows and lifted flows into Coal Funds to a 14-week high.
Emerging Markets Equity Funds
A nine-week inflow streak for EPFR-tracked Emerging Markets Equity Funds came to an end during the third week of October as flows to dedicated China Funds stalled. Of the major groups by geographic focus, only Frontier and the diversified Global Emerging Markets (GEM) Equity Funds recorded inflows while EMEA, Asia ex-Japan and Latin America Equity Funds experienced net redemptions ranging from $64 million to $1.54 billion.
With the ruling Communist Party meeting to chart economic policy for the next five years, and another meeting between US President Donald Trump and Chinese leader Xi Jinping expected at next week’s APEC Summit in South Korea, investors focused on China had good reason to wait and see before committing fresh money to mainland China-mandated funds. China State-Owned Enterprises (SOE) Funds were an exception, chalking up their biggest inflow since the second week of February.
Although Korea and Taiwan (POC) Equity Funds recorded modest inflows, those Asia ex-Japan Country Fund groups dedicated to ASEAN markets did little to pick up the slack with Thailand Equity Funds posting their 90th outflow since the beginning of last year and Vietnam Equity Funds experiencing net redemptions for the 34th time during the past 36 weeks. In the case of Thailand, CEIC Economist Per Hung Yap points to, “politics, an overreliance on tourism which has still not returned to pre-pandemic levels and the perception that Thailand is not well positioned for an AI (artificial intelligence) boom.”
Doubts about the country’s ability to harness AI is also weighing on investor sentiment towards India. So far this year, actively managed India Equity Funds have cut their exposure to information technology plays by over two percentage points. But these funds are positioning themselves for the boost in domestic consumption they expect in the wake of above-average monsoon rains, which should boost agricultural production and rural incomes, and the Indian government’s cut in the national sales tax.
South Africa’s gold story continues to resonate with investors focused on the EMEA universe, with South Africa Equity Funds absorbing fresh money for the 14th time over the past four months. But this was offset by Saudi Arabia’s reliance on oil, whose price has drifted lower in recent months, as redemptions from dedicated Saudi Arabia Equity Funds hit a level last seen in early 4Q23.
Among the Latin America Country Fund groups, flows into Argentina Equity Funds rebounded to a 21-week high while Mexico Equity Funds posted their second largest outflow during the past 12 months.
Developed Markets Equity Funds
Another solid week of inflows for US Equity Funds and a rebound in flows to Europe ex-UK-mandated funds helped EPFR-tracked Developed Markets Equity Funds post their sixth straight inflow and 16th since mid-June. Canada and Australia Equity Funds also attracted fresh money while Japan and Global Equity Funds posted net outflows.
Global Equity Funds, the biggest of the diversified Developed Markets Equity Fund groups, recorded only their fifth outflow year-to-date. But the headline number was significantly reduced by the approximately $5.36 billion in outflows from three passively managed Global Equity Funds. The funds’ administrators confirmed that these substantial outflows represented in specie redemptions.
The bulk of the latest flows into Europe Equity Funds during the week ending Oct. 22 went to the diversified Europe Regional Equity Funds, which chalked up their biggest inflow since early May despite the groups average combined allocation to France and the UK of nearly 38%. Those markets, which are trying to contain swelling deficits without cutting public spending, are increasingly unpopular with equity investors. During the latest week, France Equity Funds racked up their 10th straight outflow, and their biggest since mid-July, while UK Equity Funds tallied their 40th outflow of the year so far. Italy Equity Funds, which have enjoyed the best combination of flows and performance in 2025, posted their largest outflow in over six months.
US Equity Funds chalked up their sixth weekly inflow despite further outflows from retail share classes, funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates and US Dividend Funds. Overseas domiciled funds took in fresh money for the 10th time during the past 11 weeks.
In Japan, Liberal Democratic Party Leader Sanae Takaichi emerged as the country’s first female prime minster. Takaichi is expected to champion fiscal stimulus. But Japan Equity Funds ended the week with a modest outflow although funds with value mandates posted their sixth consecutive inflow.
Global sector, Industry and Precious Metals Funds
For the 10th time in history and first since 1Q21, all 11 EPFR-tracked Sector Fund groups posted inflows during the third week of October. Those ranged from $51 million for Telecom Sector Funds to $3.4 billion for Technology Sector Funds.
For the first time in 18 weeks, and just the third time in roughly 18 months, Energy Sector Funds saw inflows above $800 million. That extended their inflow streak to five weeks and $1.9 billion total. Four funds absorbed over $100 million, with mandates that reflected four different investment themes: nuclear and uranium, coal, oil and gas and energy infrastructure.
During a week when the price of gold climbed toward the $4,400 per ounce mark, flows into Physical Gold Funds hit a record-setting $8.4 billion. Prior to this year, flows had never surpassed $4 billion. This year, investors have committed over that amount in seven separate weeks.
The gold-focused sector group, Commodities/Materials Sector Funds, continued their 16-week inflow streak that has now reached $18.5 billion total. But this week, the fund with the biggest inflows was a natural resources ETF and scattered among the top 10 were rare earth funds.
Another cyclical sector, Financials Sector Funds posted their 15th inflow of the past 18 weeks, but they were less than a fifth of the size of last week’s $2.5 billion. Two Regional Bank Funds pulled in a combined $460 million, guiding All Bank Funds to their eighth inflow of the past nine weeks, while two leveraged funds tracking RobinHood pulled in nearly $150 million total.
Bond and other Fixed Income Funds
Flows into EPFR-tracked Bond Funds regained momentum during the week ending Oct. 22, taking the year-to-date total for the group past the $745 billion mark. The latest flows heavily favored funds with sovereign mandates, which took in $19 for every $1 committed to all Corporate Bond Funds, and bypassed several of the fund groups historically viewed as higher risk.
At the asset class level, High Yield Bond Funds posted back-to-back outflows for the first time in over five months, Collateralized Obligation (CLO) Bond Funds snapped a 26-week inflow streak and Mortgage Backed Bond Funds recorded their first outflow since the third week of April.
The ongoing government shutdown, and its impact on the flow of macroeconomic data, did not deter investors from steering another $10 billion into US Bond Funds as they tallied their 39th inflow of the year so far. Foreign domiciled funds accounted for only a twentieth of the headline number.
Despite the consistently strong appetite for US Bond Funds so far this year, the growing, pro-cyclical US deficit does have consequences. Analysis by EPFR’s sister company CEIC shows that, “By the time of the 2008 global financial crisis (GFC), US Treasuries accounted for more than 20% of central bank reserves – more than double the share of gold. The GFC shook assumptions about the international financial order; emerging economies — primarily China, Russia and Turkey — began stockpiling gold reserves. Today, gold is on the brink of surpassing Treasuries as a share of global reserve portfolios. (It’s already surpassed the euro, as our second chart shows.) Escalating geopolitical tensions have exacerbated previous trends…other factors driving the shift to gold include the resurgence of persistent inflation and growing concerns over sovereign debt.”
As was the case with their equity counterparts, one of the major regional groups drove the rebound in flows into Europe Bond Funds. The group continues to enjoy solid retail support, and Europe Corporate Bond Funds pulled in more new money than their sovereign counterparts for the fifth straight week.
Money flowed out of Asia ex-Japan Bond Funds for the second week running as investors again gravitated to Hard Currency Emerging Markets Bond Funds. But those redemptions, which included the nearly $600 million pulled out of Thailand Bond Funds, were offset the biggest flows into Global Emerging Markets (GEM) Bond Funds since 1Q23.
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