Global Navigator | Sovereign yields and flows to IG Bond Funds climb in late September

Coming into the final quarter, yields on 30-year UK sovereign bonds were heading towards a level last seen in 1998, US 10-year Treasuries were on their way to hitting a 24-year high and the spread between French and German 10-year notes was at Great Financial Crisis levels. Investors responded by steering another $18.7 billion into EPFR-tracked Bond Funds, taking their year-to-date total within striking distance of the $900 billion mark.

The latest data for the final week of September indicates that credit risk is a greater concern for investors than duration risk. Flows into all Intermediate and Long Term Bond Funds hit six-week and record highs, respectively, while Ultra Long Term Bond Funds took in over $2 for every $1 committed to Ultra Short Term Bond Funds. Meanwhile, High Yield Bond Funds chalked up their second outflow over the past three weeks while funds dedicated to the debt of municipal issuers – who are generally required to balance their budgets – also set a new weekly inflow record.

At the asset class and single country fund levels, Physical Silver Funds tallied their 11th inflow of the quarter, Convertible Bond Funds extended their longest inflow streak since 3Q25, Dividend Equity Funds took in fresh money for the 36th time YTD and Water Funds posted their 10th consecutive outflow. Redemptions from UK and Norway Bond Funds climbed to 16 and 93-week highs, respectively, UK Money Market Funds posted their largest outflow in over 10 years and Thailand Equity Funds chalked up their biggest inflow since late 4Q23.

Overall, investors redeemed over $118 billion from Money Market Funds during the week ending September 30, the third-largest outflow YTD, while committing fresh money to the remaining asset classes. Flows into Equity Funds were a fifth of the size of last week’s inflow, pulling in $11.3 billion while Bond Funds absorbed a net $7.8 billion. Alternative and Balanced Funds saw inflows reach a three-week high, taking in $3.2 and $1.8 billion, respectively.