Global Navigator | More of the same in early October

Artificial intelligence, fiscal imbalances and electoral math occupied the minds of investors during the first week of the fourth quarter as they digested fresh record highs for benchmark US indexes, a surprising result in Brazil’s election and French 10-year sovereign bond yields hitting their highest level since 2002 while looking ahead to the US mid-term elections in early November.

Those investors continue to see rising sovereign yields as an opportunity to make up some of the ground lost during the decade of quantitative easing that followed the great financial crisis. EPFR-tracked Bond Funds posted their second largest inflow year-to-date, and third largest since the beginning of the decade, as they extended a run of inflows stretching back to early 2Q25.

On the equity side, the artificial intelligence story continues to scale the wall of worry about the ability of hyperscalers to profit from their massive investments in AI and its operating infrastructure. Technology Sector Funds absorbed their fourth inflow of the past five weeks, averaging $3 billion, and dedicated Artificial Intelligence Funds posted their 13th inflow since the start of July. Year-to-date, the Technology Sector Funds tracked by EPFR have pulled in $142 billion, which is now double last year’s $71 billion and nearly triple the $51 billion seen in 2024.

This appetite for direct exposure is reflected in the divergence between flows into Technology and AI Funds and the more than $70 billion that has been redeemed from all Equity Growth Funds during the past 11 quarters.

At the single country and asset class fund levels, flows into South Africa Money Market and Bond Funds hit 69-week and record highs, while Singapore Equity Funds posted their biggest inflow since EPFR started tracking them in 4Q00 and France Equity Funds tallied their first inflow since the fourth week of May. Private Credit Funds chalked up their biggest inflow in six months, Cybersecurity Funds extended their longest run of inflows since 2Q25 and Equity Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates posted their fifth inflow since a 15-week redemption streak ended in early August.

Among the major asset classes tracked by EPFR, Bond Funds pulled in $33.8 billion during the week to October 7 and Equity Funds took in another $12.4 billion, while Balanced Funds eked out a modest inflow of nearly $205 million. Hefty redemptions seen by Money Market Funds in the previous week were more than reversed as over $166 billion flowed in this week, their third-largest inflow since EPFR started tracking these funds in 2007, sitting behind two record-setting inflows seen in 2020. Flows into Alternative Funds persisted for a 10th straight week, bringing in nearly $4 billion during the latest week with Physical Gold Funds attracting 50% of that headline number and Bear Funds 25%. Leveraged Equity Funds, meanwhile, posted their sixth outflow of the past nine weeks.