Fiscal indiscipline. Volatile policymaking. Fresh attempts to strong-arm the Federal Reserve into cutting interest rates faster and deeper. Despite this, and other market-unfriendly background noise, US-mandated Equity, Bond and Money Market Funds ended August atop the preliminary ranking of fund groups by flows received.
Investors looking to take out some insurance against the more bearish scenarios for the US and its artificial intelligence story continue to gravitate towards cash and ultra short-term debt, gold, dividend paying stocks, inflation protected bonds, alternative assets with cryptocurrencies to the fore and, to a lesser extent, European stocks and bonds.
Flows during the week ending Sept. 3 largely conformed to this pattern, with Physical Gold Funds chalking up their biggest inflow since mid-April, flows into Artificial Intelligence Funds hitting a record high, Dividend Equity Funds extending an inflow streak stretching back to late March and US Money Market Funds pulling in another $47 billion.
Overall, a net $17.5 billion flowed into all EPFR-tracked Equity Funds this week while Balanced Funds absorbed $550 million, Alternative Funds $7 billion, Bond Funds $22.2 billion and Money Market Funds $51.7 billion.
At the asset class and single country fund levels, Inflation Protected Bond Funds posted their biggest inflow since the first week of April, Leveraged Equity Funds tallied back-to-back inflows for the first time in nearly five months, and Cryptocurrency Funds took in fresh money for the 17th time over the past 20 weeks. Mainland China-mandated Money Market Funds recorded their largest inflow since early 4Q24, Russia Bond Funds racked up their 32nd consecutive inflow and redemptions from Greece Equity Funds climbed to a 21-week high.
Emerging Markets Equity Funds
EPFR-tracked Emerging Markets Equity Funds started September by posting their third straight inflow, and 11th over the past 15 weeks, with all four of the major groups by geographic focus again attracting fresh money. EM Equity ETFs saw weekly inflows for the 13th time since late May. The share of all assets held by all EPFR-tracked EM Equity Funds that are managed by ETFs now stands at 45%, up from 29% at the beginning of 2020.
Elsewhere, Frontier Markets Funds saw money flow out for the sixth straight week, Leveraged EM Equity Funds chalked up their 17th outflow during the past 20 weeks, and retail share classes collectively experienced net redemptions for the 51st time over the past 12 months.
Both China and India Equity Funds contributed to the headline number for all Asia ex-Japan Equity Funds, with the latter snapping a five-week run of outflows spurred by tensions with the US over imports of Russian oil. Mainland China-mandated funds extended their longest inflow streak since a four-week run ended in early 2Q25 while Global Emerging Markets (GEM) ex-China Funds posted their third outflow over the past month.
Solid flows into Brazil and Mexico Equity Funds allowed all Latin America Equity Funds to tally their first consecutive weekly inflow since mid-June. The latest sector allocations data for actively managed Latin America Regional Funds shows average exposure to energy and materials climbed by 91 and 177 basis points, respectively, during the first month of the current quarter while the average weighting for consumer staples fell to a level last seen in 1Q09.
Among the EMEA Country Fund groups, stable oil prices helped Saudia Arabia Equity Funds extend an inflow streak stretching back to the first week of the year, and surging gold prices provided a tailwind for South Africa Equity Funds which extended their longest run of inflows since 1Q18.
Developed Markets Equity Funds
With a corporate earnings season that largely exceeded expectations winding down and a cut in US interest rates later this month regarded as all but certain, Developed Markets Equity Funds enjoyed broad — but somewhat shallow – inflows during the week ending Sept. 3. Both Japan and Europe Equity Funds saw their outflow streaks come to an end, US and Global Equity Funds took in over $5 billion apiece and flows into Canada Equity Funds rebounded to a 10-week high.
Japan Equity Funds recorded an inflow for the first time since the first week of June despite a sixth consecutive week of net redemptions from foreign-domiciled funds. Retail flows hit a 20-week high and Leveraged Japan Equity Funds posted consecutive inflows for the first time since the second week of April.
Between the clipped wings of Prime Minister Shigeru Ishiba’s now minority government, changing trade dynamics, and rising debt servicing costs, this fund group may struggle to maintain the latest shift in flow momentum. EPFR sister company CEIC recently noted that, “Japan’s economy continues to be hit by Donald Trump’s tariff shock, even with a trade deal. The first data since the US president and Prime Minister Shigeru Ishiba reached an agreement showed the nation’s exports fell 2.6% year-over-year in July, the sharpest decline in four years. This disappointment was driven by shrinking shipments of cars and other manufactured goods.”
CEIC went on the point out that, “Vehicles and auto parts are a crucial sector, accounting for roughly one-third of Japan’s exports to the US. Weakness was not limited to the US market. Shipments to China — Japan’s second largest export destination — also fell sharply, again driven by autos and machinery. Looking ahead, risks to the downside remain. CEIC’s proprietary nowcast for Japanese exports is projecting further deterioration in August.”
Europe Equity Funds tallied a modest inflow driven largely by the money attracted by the two major regional groups. With hopes for greater, defense-driven fiscal stimulus taking hits from recent pushes for a ceasefire in Ukraine and rising bond yields, investors found little to like at the country level. France Equity Funds racked up their ninth outflow over the past 10 weeks ahead of a vote that is expected to bring down the latest minority government, Germany Equity Funds extended their longest redemption streak since 4Q24 and Greece Equity Funds posted their biggest outflow in over four months.
Large cap funds with mixed or value mandates accounted for the bulk of the inflows absorbed by US Equity Funds.
Global sector, Industry and Precious Metals Funds
The total trading volume (the sum of the absolute value of flows) of the 11 EPFR-tracked Sector Fund groups shot to a 15-week high of $11.75 billion coming into September, with four groups each taking in between $1 and $3 billion and another – Technology Sector Funds – racking up inflows of nearly $4.3 billion. Redemptions during the week ending Sept. 3 were limited to three interest rate sensitive groups: Energy, Real Estate and Utilities Sector Funds. In six of the 11 groups, flows into the China-dedicated funds outweighed those seen by US-dedicated funds.
Telecoms Sector Funds tallied their fourth largest weekly inflow on record but, unlike the record-setting inflow early August, two-thirds of the headline number this week stemmed from flows to China-dedicated funds.
China-mandated fund flows were also drivers for Commodities/Materials Sector Funds, with overall flows pushing even higher than the previous week to a record-setting $2.4 billion. Gold Mining Funds accounted for nearly 60% of the headline number with their fourth inflow of the past five weeks, Silver Mining Funds chalked up their 13th inflow of the past 14 weeks and Chemical Funds mustered up a good 15% of the overall total.
A custom group of 11 commodities funds, Chemical Funds have seen seven straight weeks of above-average inflows. Total assets for this group are now more than double the previous record high of $1.1 billion seen in early 2Q21. Three funds specifically have seen assets increase 5- to 10-fold since mid-July this year.
China and US dedicated funds were equally responsible for the $1.1 billion and $2.2 billion that flowed into Consumer Goods and Financial Sector Funds, respectively. For the former sector, two consumer staples funds absorbed nearly $400 million combined, a discretionary ETF pulled in about half that amount and a leveraged 2x ETF tracking Tesla saw a net $100 million flow in.
Technology Sector Funds posted their second-highest weekly inflow of the year and their ninth inflow of the past 10 weeks. Flows topped $100 million for 23 funds this week, of which seven were focused on robots and artificial intelligence, three internet related, and another three tracking the semiconductor or chip industry.
Bond and other Fixed Income Funds
The week ending Sept. 3 saw flows to EPFR-tracked Bond Funds exceed $20 billion for the seventh time quarter-to-date as investors put predictability and consistent income streams ahead of concerns about sovereign debt dynamics, creeping fiscal dominance and assaults on central bank independence. For the first time since the earliest week of May, Sovereign Bond Funds collectively took in more fresh money than Corporate Bond Funds.
All of the major groups by geographic mandate recorded inflows that ranged from $647 million for Asia Pacific Bond Funds – the biggest since early 4Q23 – to $14.3 billion for US Bond Funds.
At the asset class level, Convertible Bond Funds racked up their 15th consecutive inflow, flows into Inflation Protected Bond Funds climbed to a 21-week high, Collateralized Loan Obligation (CLO) Funds extended an inflow streak stretching back to mid-April, Ultra Short-Term Bond Funds absorbed over $1 billion for the 19th time over the past 20 weeks and Mortgage Backed Bond Funds recorded an inflow for the 19th week running.
Although French 30-year bond yields recently hit a 14-year high and yields for their UK counterparts climbed to a level last seen in 1998, Europe Bond Funds posted a collective inflow that included the nearly $400 million absorbed by dedicated UK Bond Funds. Although there has been a recent bounce, allocations to French debt among actively managed Europe Regional Bond Funds has been sliding for the better part of a decade while exposure to UK bonds climbed steadily from 2019 until 2023.
Two-thirds of the net inflows recorded by Asia Pacific Bond Funds went to Japan-mandated funds, with intermediate term the preferred duration, while Australia Equity Funds posted their 51st inflow over the past year.
Emerging Markets Bond Funds added to their longest inflow streak since 1Q21 as flows to China Bond Funds climbed to over $600 million. After six weeks when Europe-domiciled funds recorded substantially higher inflows than US-domiciled ones, the latest week saw roughly equal flows to both groups.
Foreign-domiciled US Bond Funds posted their 11th straight inflow and retail share classes absorbed fresh money for the 19th week running as flows remain tilted towards Intermediate- and Short-Term Funds.
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