Income and liquidity guide flows in early February

Both Physical Gold and Cryptocurrency Funds recorded outflows in early February as flows shifted to fund groups offering income, liquidity or both. Investors committed over $85 billion into Money Market Funds, added to Municipal Bond Funds latest inflow streak, lifted flows into Dividend Equity Funds to an eight-week high and steered fresh money into Autocallable Income funds for the 33^rd straight week.

Flows into US Money Market Funds continue to shrug off the declining yields offered by these funds. Average monthly yields for taxable funds, which stood at over 4% early last year with some prime institutional funds still offering over 5%, have dropped to around 3.5%. But the total AUM of US-mandated funds tracked by EPFR is now north of $9 trillion and is over $7.4 trillion for the smaller universe tracked in greater detail by iMoneyNet.

Elsewhere, redemptions from mainland Chinse mainland-mandated Equity and Bond Funds slowed, funds with global mandates pulled in a combined $24.6 billion, flows to Europe Equity Funds climbed to their highest level since the second week of 2Q25 and Equity Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates chalked up their second inflow of 2026.

Overall, EPFR-tracked Equity Funds posted a collective net inflow of $34.6 billion during the latest reporting period, which ran through Feb. 4. Bond Funds absorbed $22.9 billion, Balanced Funds pulled in $2.5 billion – their biggest inflow since the first week of 2025 – and Money Market Funds $87.1 billion. Alternative Funds posted their first outflow of 2026 and only their sixth since the beginning of last year.

At asset class and the single country fund levels, Collateralized Loan Obligation (CLO) Funds set a new weekly inflow record, flows into Leveraged Equity Funds hit their highest level in nearly 10 months and Coal Funds recorded their biggest inflow since mid-October. UK Equity Funds experienced net redemptions for the 98^th time over the past 24 months, flows into Russia and Romania Bond Funds climbed to five-year and record highs, respectively, and Indonesia Equity Funds chalked up their biggest outflow since late 3Q25.

Emerging Markets Equity Funds

Although mainland Chinese mainland-mandated funds added to their longest redemption streak since mid-3Q25, the latest outflow was less than a 10^th the previous week’s total. With the diversified Global Emerging Markets (GEM) Equity Funds adding to their longest inflow streak since 1H21, flows into EMEA Equity Funds again hitting their highest level since 1Q23 and Korea Equity Funds enjoying record-setting inflows, EPFR-tracked Emerging Markets Equity Funds started February by snapping their two-week outflow streak.

Retail investors steered money into this group for the third week running, the first time that has happened since early 3Q23, and flows into EM Leveraged Equity Funds climbed to a 69-week high while EM Dividend Funds extended their longest outflow streak in over four years.

Among the Asia ex-Japan Country Fund groups, Taiwan (Province of China) Equity Funds took in over $1 billion for the first time in over two months and Korea Equity Funds set a new inflow mark. During the latest week Korea’s combination of reform and technology stories, allied to a period of relative calm in its relations with North Korea, propelled the country’s benchmark KOSPI index to another record high during the latest reporting period before a technology-led selloff in the US pulled it back.

The week ending Feb. 4 also saw India Equity Funds post their first inflow since mid-December ahead of the 2026-27 budget presentation. The budget draft includes proposals to modestly boost foreign access to Indian stocks, provide tax incentives for foreign companies using Indian data centers, support targeted manufacturing sectors and significantly hike defense spending.

Latin America Equity Funds posted a solid collective inflow on the heels of last week’s record-setting influx. Behind the headline number, however, was another large inflow for Brazil Equity Funds and the biggest outflow from Mexico Equity Funds since EPFR started tracking them in late 2000.

Fund groups offering exposure to emerging European markets again underpinned another week of above average flows into EMEA Equity Funds. But Africa-mandated funds played a strong supporting role, with Africa Regional Equity Funds posting their second-largest inflow over the past 12 months and South Africa Equity Funds the biggest on record.

Developed Markets Equity Funds

EPFR-tracked Developed Markets Equity Funds started February by posting consecutive weekly inflows for the first time since mid-December. Of the major groups by geofocus, only Japan Equity Funds posted an outflow while Global Equity Funds absorbed over $10 billion for the fourth time year-to-date and flows into Europe Equity Funds hit their highest level in over nine months.

US Equity Funds chalked up a modest collective inflow that included the biggest headline number for leveraged funds since the second week of November.  The latest week saw the benchmark S&P 500 index test the 7,000-point level before falling back and President Donald Trump nominated Kevin Warsh, a candidate who defies easy categorization as a rate-cutting ‘dove’, to chair the Federal Reserve.

The bulk of the latest week’s inflows went to Large Cap Blend Funds. These funds were by far the biggest flow magnets among the different US Equity Fund groups in 2025 and turned in one of the better collective performances.

Of the more than $4 billion that flowed into Europe Equity Funds, three-quarters was absorbed by the two major regional groups. At the country level, Switzerland Equity Funds saw flows rebound and Greece Equity Funds pulled in over $100 million, smashing the previous weekly inflow record set in mid-1Q15. In the case of Greece, investors are anticipating an upgrade by MSCI from emerging to developed markets status that, if announced in late March, will come into effect this summer.

Investors focused on developed Asian markets continue to stay on the sidelines when it comes to Japan, which goes to the polls on Sunday for an election which is expected to strengthen the government’s ability to implement its tax cutting, fiscally stimulatory agenda. In the meantime, flows into Pacific Regional and Australia Equity Funds climbed to seven and nine-week highs, respectively, and Singapore Equity Funds chalked up their biggest inflow since mid-4Q21.

Actively managed Global ex-US Equity Funds have yet to show the same enthusiasm for Australia, with average allocations to that market 170 basis points lower that its latest peak in mid-3Q22. The group pulled in another $5.4 billion during the latest week while funds with fully global mandates absorbed nearly twice that amount.

Global sector, Industry and Precious Metals Funds

With earnings from four of the ‘Mag 7’ companies to digest and over 500 companies reporting next week, sector-oriented investors remained active coming into the second month of the year. The week ending Feb. 4 saw four of the 11 EPFR-tracked Sector Fund groups pull in over $2 billion while four groups recorded outflows between $335 million and $428 million.

Among the groups absorbing fresh money, Infrastructure Funds added to an inflow streak stretching back over nine months, Energy and Commodities Sector Funds recorded their seventh and ninth consecutive inflow, respectively, Industrials Sector Funds took in fresh money for the 11^th straight week and 48^th over the past year and Telecoms Sector Funds posted their fifth inflow since the final week of December.

Space and Satellite Funds, a custom group that bridges both Industrials and Telecoms Sector Funds, posted their 11^th straight inflow and 38^th over the past nine months. Interest in the sub-sector has grown as the frequency of launches by private companies has grown from quarterly to weekly.

The latest week saw flows to Technology Sector Funds rebound before the latest bout of angst about the commercial value of artificial intelligence (AI) hit markets. Chinese mainland-mandated funds recorded their biggest inflows since early 4Q25 and Korea Technology Sector Funds pulled in over $1 billion while US dedicated funds tallied their eighth outflow over the past 10 weeks.

Healthcare/Biotechnology Sector Funds were among the groups recording an outflow, their first of the year, as some underwhelming earnings and adverse political decisions undercut sentiment. Of the individual funds that did record inflows during the latest week, seven were Greater China focused and four of those had pharmaceutical mandates.

Bond and other Fixed Income Funds

EPFR-tracked Bond Funds carried their solid start to 2026 into February, posting their 41^st consecutive inflow and lifting their year-to-date total within striking distance of the $90 billion mark. The latest inflows came during a week when Kevin Warsh was nominated to replace Jerome Powell as chair of the US Federal Reserve in May and Japanese sovereign bond yields remained elevated by the prospect of a reversal in Japan’s recent progress towards more balanced budgets. Flows to Global Bond Funds snapped back and US, Canada and Europe Bond Funds also enjoyed solid inflows.

At the asset class level, Municipal Bond Funds current inflow streak hit five weeks and $11.6 billion, Inflation Protected Bond Funds posted their biggest inflow since the final week of 3Q25, Catastrophe Bond funds absorbed fresh money for the 24^th time during the past six months and Convertible Bond Funds pulled in over $1 billion for the third straight week.

With Japan’s Feb. 8 election in the spotlight, redemptions from Japan Bond Funds jumped to a level last seen during the second week of 2025. In a recent note to clients, economists from EPFR sister company CEIC observed that Prime Minister Sanae Takaichi’s plans to spend more and cut taxes, which she is putting to the voters this weekend,  has triggered “rapid moves and dislocations that were unknown during the decades of ultra-low interest rates and yield curve control. Some commentators have warned of parallels with the UK’s “Liz Truss moment,” when bond markets balked at a new leader’s unfunded tax cuts.”

Among the impacts of this, they argue, are “rapid and pronounced change in bond yields (defined as a rolling 90-day period) [which are] correlated with a chilling effect on foreign inflows to Japanese bond funds — despite the appeal of those higher coupons. Inflows are well down from their recent September peak.”

Another week of redemptions from Chinese mainland dedicated Bond Funds kept the headline number for all Emerging Markets Bond Funds underwater. But the diversified Global Emerging Markets (GEM) Bond Funds remain popular and Frontier Markets Bond Funds chalked up their 17^th consecutive inflow. Currently, the biggest single country allocations among funds dedicated to frontier markets are, in descending order, Nigeria, Egypt, Pakistan, Ghana, Angola, Argentina, Zamia, Ivory Coast and Venezuela.

Investors looking to Europe again favored Europe Corporate Bond Funds over sovereign-mandated funds. The latest week saw stronger than usual flows at the country level. Redemptions from Denmark Bond funds jumped to a33-week high and Spain Bond Funds posted their second-largest outflow over the past year while flows into Italy Bond Funds were the biggest since late October.

US Bonds recorded their 41^st straight inflow as overseas domiciled funds attracted modest amounts of fresh money and flows into retail share classes increased for the third week in a row.

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