A raft of second quarter earnings reports from major US financial companies during the second week of July showed that there are some beneficiaries from the unsettled geopolitical and US policy environments that marked the first half of 2025. Sharply higher trading prospects, and expectations of a more accommodative regulatory environment, helped EPFR-tracked Financial Sector Funds attract over $1 billion for the third week running.
Financial Sector Funds, which extended their current inflow streak to four weeks and $5.1 billion, are not the only winners in the current economic climate. With legislation establishing a new framework for cryptocurrencies moving through the US Congress, and investors hungry for alternatives to more conventional assets, Cryptocurrency Funds recorded their second-highest weekly total since EPFR started tracking them.
Despite the latest round of record highs from major US and European equity benchmarks and the strong appetite for Alternative and High Yield Bond Funds, the latest flows reflect the ambivalence many investors have about current conditions. Leveraged Equity Funds chalked up their 14th straight outflow, Bear Funds took in fresh money for the 12th time over the past 14 weeks and Ultra Short Bond Funds tallied their 26th inflow
Overall, the week ending July 16 saw a net $4.7 billion flow into all EPFR-tracked Equity Funds while Balanced Funds absorbed $1.2 billion, Alternative Funds $9 billion and Bond Funds $15.6 billion. Redemptions from Money Market Funds hit a 13-week high of $26 billion.
At the asset class and single country fund levels, flows to Inflation Protected Bond Funds rebounded to an eight-week high, Convertible Bond Funds recorded their biggest inflow since the first week of 4Q24 and dedicated Coal Funds posted their biggest inflow since EPFR started tracking them in 2008. Switzerland Equity, Bond and Money Market Funds all tallied inflows for the first time since early June, France Equity Funds experienced their heaviest redemptions year-to-date high and flows into Australia Bond Funds climbed to a three-month high.
Emerging Markets Equity Funds
Going into the second half of July, EPFR-tracked Emerging Markets Equity Funds chalked up – narrowly – their sixth inflow over the past eight weeks as flows into EMEA and the diversified Global Emerging Markets (GEM) Equity Funds offset redemptions from Asia ex-Japan and Latin America Equity Funds.
Flows into EM Dividend Funds climbed to their highest level since mid-December and funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates added to their longest run of inflows since 2023. But EM Equity Fund retail share classes, which posted six inflows during 1H24, recorded their 26th collective outflow of 2025.
EMEA Equity Funds took in another $200 million during the week ending July 16, thereby extending their longest inflow streak since 1Q17. The biggest flow into Saudi Arabia Equity Funds in over three years underpinned that headline number, as investors factor in reduced threat to the oil-rich kingdom from Iran after its recent battering at the hands of Israel.
Among the Asia ex-Japan Country Fund groups, Korea Equity Funds pulled in another $506 million, Vietnam Equity Funds posted their second largest inflow over the past 27 months and flows to India Equity Funds rebounded. The latter group posted their 12th inflow over the past 14 weeks as declining food prices boost hopes of further cuts in the country’s benchmark interest rate. In a recent note to clients, EPFR sister company CEIC noted that, “Food and beverages account for almost half of India’s consumer price index (45%). Our chart shows the outsized effects that result: India’s inflation fell to 2.1% in June, the slowest pace in over 5 years.”
The latest flows into Asia ex-Japan Equity Funds were driven by several of the major single country groups, with Korea Equity Funds tallying their biggest inflow in over two years, flows into India Equity Funds hitting an eight-week high, Taiwan (Province of China) Equity Funds recording their 23rd inflow so far this year and China Equity Funds posting consecutive weekly inflows for the first time since early April.
In the case of Korea Equity Funds, the inflows were broadly based with 33 funds attracting over $10 million. Foreign domiciled funds recorded their fourth straight week of above average inflows as investors responded to the receding threat of an oil price spike and positioned themselves for the fiscal stimulus championed by new President Lee Jae-myung.
Latin America Equity Funds saw their longest inflow streak since 4Q23 come to an end as Brazil Equity Funds surrendered over $150 million and Mexico Equity Funds posted their second-largest outflow so far this year. The latest sector allocations data shows actively managed Latin America Regional Fund exposure to energy and consumer discretionary plays rebounded from 45-month and record lows, respectively, coming into May.
Developed Markets Equity Funds
The week ending July 16 saw Global Equity Funds post their 14th straight inflow. That was enough to offset redemptions from Japan and US Equity Funds, allowing EPFR-tracked Developed Markets Equity Funds to chalk up their fourth consecutive inflow and 12th over the past 14 weeks.
Japan Equity Funds experienced the heaviest redemptions of the major groups ahead of Sunday’s election for the legislature’s upper house. If the latest polls are correct, the ruling coalition will lose its majority in that chamber, further undermining its ability to get to grips with pressing economic and social issues. Foreign domiciled funds did see modest amounts of fresh money this week.
Overseas domiciled US Equity Funds also enjoyed solid inflows that were the biggest in nine weeks. But, despite US equity markets climbing to new record highs, overall flows for all US Equity Funds were negative for the 11th time during the past 14 weeks. Redemptions from retail share classes touched a 31-week high. Meanwhile, the latest monthly data show net outflows from all US Equity Funds hit a 30-month high in June, and the US dollar remains at the bottom of EPFR’s weekly G10 currency rankings.
Investors looking to Europe retained some appetite for diversified exposure, with both of the major regional Europe Equity Fund groups attracting fresh money, but they avoided direct exposure to core markets and the UK. Outflows from Germany and France Equity Funds climbed to seven and 30-week highs, respectively, while UK Equity Funds extended an outflow streak stretching back to mid-April. Italy Equity Funds did record their biggest inflow since mid-1Q24.
The largest of the diversified Developed Markets Equity Fund groups, Global Equity Funds, attracted another $7.2 billion with the biggest share going to funds with ex-US mandates. Large Cap Blend Funds continue to account for the lion’s share of the overall total, but the latest week saw flows into Global Mid Cap Growth and Small Cap Value Funds hit their highest level since 4Q23 and on record, respectively.
Global sector, Industry and Precious Metals Funds
In the week to July 16, total trading value – absolute value of outflows + inflows for the 11 major EPFR-tracked Sector Fund groups – stood just above the weekly average of $6.8 billion seen year-to-date. Inflows ranged from $70 million for Energy Sector Funds to over $1 billion for Financials and Industrials Sector Funds.
Meanwhile, redemptions for Healthcare Sector Funds surged to more than 2.5 times the size of last week’s total. The headline number was the biggest since mid-2020, a time when the group was actually thriving from health tech advancements and vaccine demands in response to Covid-19.
At the fund-level, the heaviest outflows this week ranged from $100 million to $724 million for the top four ETFs, two of which were US-domiciled biotechnology focused while another was China-domiciled and benchmarked to track leading Hong Kong pharma firms. Outflows for China-domiciled Healthcare Sector Funds have been exceeding their normal levels in recent weeks, racking up their 12th outflow of the past 18 weeks.
The earnings report of one US firm, Abbot Laboratories, highlighted some of the headwinds that healthcare firms are currently facing. The company, which specializes in medical devices, trimmed its full-year guidance during their latest earnings report, which noted declining Covid test sales and managing potential impacts of higher tariffs.
The latest week saw Industrials Sector Funds’ current inflow streak hit 16 weeks and $9 billion with Aerospace & Defense Funds accounting for nearly 70% of the overall headline number. Two funds dedicated to shipbuilding – an industry benefiting from global LNG transport demand as US based projects intensify – appeared in the top 10 funds with the biggest inflows.
Reassuring remarks came from the major US banks that reported their earnings this week, and investors pumped another $1.4 billion into Financials Sector Funds. It was their third straight inflow at that level and fourth consecutive after nearly three straight months of being dumped. China-domiciled funds accounted for two-thirds of the headline number and extended their inflow streak to five weeks. The US was ranked second among domiciles with the biggest inflows, followed by Canada and Germany-domiciled funds which pulled in six and 15-week high inflows, respectively.
This came during a week when major US banks reported earnings, with trading and dealmaking revenues leading to better-than-expected results. Although tariff-related market volatility dampened investment banking activity early in the quarter, momentum recovered relatively quickly, leaving banks in a stronger position.
Bond and other Fixed Income Funds
For fixed income investors, the slings and arrows came thick and fast in mid-July. Japan headed into an election expected to compromise the current government’s ability to craft credible economic policy, US President Donald Trump stepped up his campaign to replace the current Federal Reserve chair with a more accommodative one, British inflation data hit expectations for lower interest rates, and France’s current prime minister launched another effort to rein in that country’s worrying deficit.
Investors responded by keeping a grip on duration risk, tilting towards investment grade corporate debt, revisiting some of their assumptions about inflation and cutting their exposure to the UK. But, overall, they steered another $15 billion into EPFR-tracked Bond Funds. Along the way, they narrowly extended Emerging Market Bond Funds’ longest run of inflows since 2021, steered another $2.7 billion into High Yield Bond Funds and ran Collateralized Loan Obligation (CLO) Bond Funds out to 13 weeks and $3.6 billion.
The latest flows into US Bond Funds saw those domiciled overseas post their biggest collective inflow since early November. Flows into Short Term US Bond Funds climbed to a 10-week high, with Ultra Short Term Funds accounting for a sixth of the overall total. Funds with sovereign mandates outgained their corporate counterparts in both cash and relative (% of AUM) terms, something that has not been the case in recent months.
Asia Pacific Bond Funds enjoyed another solid week despite the angst surrounding future demand for long-dated Japanese government bonds, with flows into Japan Bond Funds coming in at a six-week high and Australia Bond Funds attracting over $200 million.
The question of future demand also hovered over European sovereign bonds in mid-July. Yields on 10-year French and German debt hit levels last seen in 2011 and the yield on British 10-year notes touched 4.6%. Investors responded by hitting UK Bond Funds with their third largest outflow so far this year while pushing more than $4 billion into Europe ex-UK Regional Bond Funds.
Emerging Markets Bond Funds added their inflow streak as China and Thailand Bond Funds both absorbed over $300 million. EM Corporate Bond Funds posted their 13th consecutive inflow while funds with sovereign mandates racked up their biggest outflow since the second week of April.
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