Tech Sells Off as Bonds and Materials Take Lead

Japan dominated the headlines this week — but not in a good way. ETF outflows from Japanese-focused funds hit $69B in just seven days, the largest single-geography bleed by a wide margin. That alone tells the story: risk appetite is shifting, and fast.

Over three months, Japan was a net recipient of $62B. The reversal is sharp and hard to ignore.

Geography Flows

The U.S. drew $4.6B in net inflows this week. That sounds solid until you see the gross numbers: $63B in and $59B out, a flow imbalance of just 52. Money is moving, but not with conviction in either direction.

Emerging Markets stood out positively. A flow imbalance of 88 — nearly pure buying pressure — pushed $2.1B into EM funds on the week. Developed Markets Ex-U.S. added $1.9B with a similar bias.

China reversed course. It bled $8.3B this week after collecting $21.7B over the prior three months. Hong Kong also continued its losing streak, down $587M this week and $10.2B over three months.

Sector Rotation

Tech is the week's biggest sector loser. Information Technology ETFs shed $3.3B. That is a jarring reversal — over three months, tech pulled in $72B, the top sector by far.

Materials took the crown this week with $2.1B in inflows and a flow imbalance of 85. Over three months, Materials collected only $2.2B total — meaning this week alone matched the entire quarter.

Energy flipped negative this week, down $218M net after shedding $6.4B over three months. It is the only sector with consistent outflows on both timeframes.

Health Care was also soft, losing $364M this week despite $6.9B of three-month inflows. Real Estate and Industrials were essentially flat on the week.

Asset Class and Strategy Flows

The clearest signal is in asset classes. Equities bled $59B this week. Fixed Income took in $15.7B. Commodities added $5.5B.

Flip to three months and equities led all classes with $706B. Fixed Income added $245B. Commodities, however, dropped $28.7B over three months — making this week's $5.5B commodity inflow a genuine trend reversal worth watching.

On strategy, active funds are the standout winner. They attracted $7.95B this week with an imbalance of 79.5 — strong buying pressure. Over three months, active strategies collected $221B, second only to vanilla passive. Value added $1.4B this week, while growth strategies bled slightly. That is a notable short-term rotation away from growth.

Vanilla passive strategies posted a massive $82B net outflow this week despite $330B of three-month inflows. Gross flows were enormous in both directions, suggesting heavy repositioning rather than outright selling.

The overall tone is defensive. Money is leaving equities, tech, and Japan. It is moving into bonds, commodities, active management, and value. The week's data points to a risk-off shift, even if the three-month trend remains broadly constructive.