Rotating towards the US in mid-June

A week that saw the first meeting of the US Federal Reserve under Kevin Warsh, a record-setting IPO for Elon Musk’s Space X and the drafting of a memorandum of understanding between the US and Iran saw investors pour money into US-mandated asset classes. Combined flows into US Equity, Bond and Money Market Funds exceeded $170 billion, with US Equity Funds setting a new record. Investors have now committed over $5 trillion to these three groups since the beginning of 2023.

With the shadow of war over the Strait of Hormuz lifting – though not completely banished – the focus continued to shift back to the artificial intelligence (AI) story that has driven global markets for much of the past three years. Technology Sector Funds posted a new inflow record for the second week running, as did dedicated Semiconductor Funds, and Data & Infrastructure Funds tallied their 23rd inflow of the year so far.

Overall, a net $126.4 billion flowed into all EPFR-tracked Equity Funds during the week ending June 7. Bond Funds absorbed $19.7 billion and Money Market Funds $25.1 billion and Balanced Funds posted their ninth inflow over the past nine months while Alternative Funds experienced net redemptions for the fourth week running.

The share of assets held in exchange traded funds (ETFs) continues to grow at a rapid pace. At the beginning of the decade, the assets managed by all ETFs stood at $6.3 trillion. They now stand at $22.9 trillion, having passed $10 trillion in 4Q21, $15 trillion in 4Q24 and $20 trillion in 1Q26.

At the asset class fund level, Cryptocurrency Funds extended their longest run of outflows since 3Q23, year-to-date flows into Municipal Bond Funds climbed past the $57 billion mark, Bear Funds posted consecutive weekly outflows for the first time since late December, Cash Cow Funds reversed the previous week’s record-setting inflow and Free Cash Flow (FCF) Funds chalked up their biggest inflow in over eight months.

Emerging Markets Equity Funds

The week ending June 17 saw Emerging Markets Equity Funds chalk up their ninth outflow over the past 10 weeks as redemptions from Chinese mainland Equity Funds continue to largely offset flows into other groups, retail share classes saw money flow out for the ninth week in a row and EM Bear Funds posted their first outflow since the final week of March.

Filtered by domicile, Japan-based EM Equity Funds extended a redemption streak that started in mid-February, Europe-domiciled funds saw money flow out for the 12th time during the past 15 weeks and funds domiciled in the US posted their first collective inflow since the third week of April.

Among the major regional groups, only EMEA Equity Funds recorded an inflow as investors penciled in more favorable energy equations for oil importers such as Poland, South Africa and Turkey. Flows into Turkey and South Africa Equity Funds climbed to five and 16-week highs, respectively, while Poland Equity Funds chalked up their fourth consecutive inflow. EMEA markets currently dominate the top two quintiles of EPFR’s weekly EM rankings, filling nine of the 10 slots.

With investors pulling money out of Latin America Equity Funds for the fifth straight week, a run that has seen them redeem some 3.5% of the group’s asset base, regional markets now occupy the lowest quintile of the rankings. Colombia Equity Funds were the exception during the latest week, posting their 13th straight inflow and biggest since the second week of April, as the country heads into a runoff presidential election pitting pro-market Abelardo De La Espriella against left-of-center Ivan Cepeda.

The latest redemptions from Chinese mainland Equity Funds lifted the year-to-date total over the $230 billion mark. That is more than half the $398 billion the group took in between 2020 and 2025. Hong Kong (SAR) Equity Funds also saw money flow out, with the latest outflow the biggest in over a year. Elsewhere, a tepid start to the annual monsoon rains provided another headwind for India Equity Funds, which tallied their fourth straight outflow and 15th during the past four months.

Developed Markets Equity Funds

The week ending June 17 saw Developed Market Equity Funds post a new weekly inflow record and they took in fresh money for the 12th week in a row. In addition to the prospect of an end to the US-Iran conflict, the latest headline number was influenced by the second of the year’s “quadruple witching” dates when several option classes are closed, rolled over, or replaced. The settlement process usually pushes money into ETFs – particularly US-mandated ones – that, depending on renewal activity, flows out again over the following weeks.

Europe Equity Funds remained on the outside during the latest reporting period as investors digested the European Central Bank’s latest interest rate hike and the length of time it will take for the benefits of lower energy prices to make themselves felt. Europe ex-UK Regional Funds accounted for the bulk of the latest outflows, with UK Equity Funds posting their sixth inflow of the year after recording only four inflows during 2025.

Fiscal rectitude remains a hard sell for investors looking to Europe, with four of the five fund groups dedicated to ‘Frugal Five’ markets experiencing net redemptions that included the biggest outflow for Netherlands Equity Funds since mid-April. Among the ‘Club Med’ groups, flows into Italy Equity Funds hit their highest level in 11 months while Spain Equity Funds tallied their biggest outflow so far this year.

A new weekly inflow record for all US Equity Funds did not stop retail share classes from extending a redemption streak stretching back to mid-3Q25. But US Dividend Equity Funds took in over $10 billion and overseas domiciled US Equity Funds posted their biggest inflow since the final week of last September. To the north, Canada Equity Funds chalked up their second largest inflow year-to-date. But interest from investors with the means to utilize Canada-mandated Hedge Funds appears to have peaked.

Japan Equity Funds posted their second straight inflow as investors digested the country’s latest supplemental budget and penciled in the positive impact of lower energy prices.

Global Sector, Industry and Precious Metals Funds

For the second week running, Technology Sector Funds absorbed significantly more money than any of the other major EPFR-tracked Sector Fund groups, posting their second inflow record so far this month. Overall, the group was one of eight to record inflows this week that ranged from $54 million for Healthcare/Biotechnology Sector Funds to the more than $19 billion absorbed by Technology Sector Funds.

At the individual fund, the latest flows into Technology Sector Funds were topped by the over $8 billion that went into the State Street Technology Select Sector SPDR ETF. But 28 funds took in over $100 million and the mandates of the 10 biggest money magnets ranged from semiconductors through cybersecurity to leveraged single stock exposure.

The week ending June 17 was marked by an offering that was viewed by investors through multiple lens, the SpaceX IPO, which was the biggest on record. Though primarily an aerospace and defense play in the industrials sector, SpaceX is also seen as a technology and telecoms stock. While dedicated Space & Satellite Funds posted a modest outflow, both Telecoms and Industrials Sector Funds posted solid inflows with commitments to the latter hitting a 15-week high.

Among the groups posting outflows were Energy Sector Funds, which added to their current outflow streak as the price of a barrel of oil dropped below $80. Redemptions from dedicated Coal Funds hit their highest level since mid-March.

Redemption from Physical Gold Funds climbed to a 12-week high as the prospects of higher US interest rates sapped investor demand. The group’s current run of outflows is the longest since 2Q24. Palladium and Platinum Funds, meanwhile, chalked up their fourth and eighth consecutive outflows, respectively.

Bond and other Fixed Income Funds

With 2025 less than half over, EPFR-tracked Bond Funds saw year-to-date inflows climb past the $500 billion mark. US and Europe-mandated funds drove the latest week’s headline number during a week when the US Federal Reserve met for the first time under the new leadership of Kevin Warsh and data showed US inflation exceeding 4% in May.

At the asset class level, Inflation Protected Bond Funds extended their longest run of inflows since 2021, Convertible Bond Funds snapped their latest inflow streak, Mortgage-Backed Bond Funds tallied their 22nd inflow of the year so far, flows into Catastrophe Bond Funds climbed to a 27-week high and High Yield Bond Funds took in fresh money for the 11th week running.

While the Federal Reserve kept a rate hike on the table when it met in mid-June, the European Central Bank (ECB) delivered a 0.25% increase at its June 11 policy meeting. Europe Bond Funds pulled in another $3.8 billion during the following week. According to analysis by CEIC economist Ahmet Kaya, the hike was widely anticipated, but “the more difficult assessment is what the ECB will do next, and whether there are lessons to be learned from the 2022 hiking cycle. Given that underlying economies remain weak, and the EU has diversified its energy sources in the wake of the Russia-Ukraine war, it’s too early to price in more aggressive tightening.”

According to Kaya, “This is a much different cycle than the one we saw in 2022, which followed pandemic-era stimulus (including negative interest rates) and post-Covid dislocations. Those demand-driven factors drove a sharp uptick in headline and core inflation long before Russia invaded Ukraine and gas flows to Western Europe were disrupted. Today, the ECB is hiking from a position of tighter financial conditions, meaning the marginal impact of further hikes may be less pronounced.”

The prospect of a rate hike in the second half of 2026 also had little impact on the headline number for all US Bond Funds, though funds with corporate mandates attracted $11 for every $1 committed to their sovereign counterparts and Intermediate Term Corporate Funds recorded their biggest inflow since late 4Q23. Foreign domiciled funds pulled in over $700 million.

Emerging Markets Bond Funds eked out a modest net inflow driven by funds with hard and mixed currency mandates. Frontier Markets Bond Funds posted their 12th straight inflow and 21st year-to-date. Currently, the top five single country allocations among Frontier Markets Funds are, in order, Nigeria, Angola, Argentina, Kazakhstan and Venezuela.