Japan and Active Funds Lead the Week

Japan grabbed the spotlight this week. ETF flows into Japanese equities hit $6.3B in seven days. That puts Japan second only to the US among all geographic destinations, with a flow imbalance of 77.3 — well into strong buying territory.

Geography Flows

The US remained the largest single destination. It pulled in $7.2B net over the past week. But the story is the gap between this week and the 3-month trend. Over three months, Japan attracted $98B in net flows — its flow imbalance was a more moderate 59 over that stretch. The past week saw buying pressure intensify sharply to 77.3, signalling fresh institutional interest.

China is the clearest reversal. Over 3 months, China attracted $34B in net inflows. This week, it flipped to a $3.6B outflow. Flow imbalance dropped to 32.7 — firmly in selling pressure territory. Hong Kong bucked that trend, taking in $3.3B with an imbalance of 78.8. Emerging Markets broadly remained positive at $1.5B for the week. South Korea and Taiwan both saw outflows this week, despite posting strong 3-month gains of $41B and $23B respectively. That looks like profit-taking.

Sector Rotation

Technology ETFs took the biggest hit this week. Outflows reached $1.5B, the worst of any sector. This is a significant shift. Over 3 months, tech was the top sector by a wide margin at $48.5B in inflows. Financials also bled $1.1B this week, reversing a positive 3-month trend of $3.3B.

Energy was the standout gainer at $477M for the week. But zoom out and the 3-month picture tells a different story — Energy saw $5.2B in outflows over that period. This week's buying could be a tactical bounce rather than a trend change.

Health Care attracted $205M this week and remains in positive territory over 3 months at $6.8B — a quiet but consistent destination. Real Estate also saw steady inflows of $165M this week and $4.3B over 3 months.

Asset Class and Strategy

Equities dominated all other asset classes. Net inflows hit $21.1B this week, compared to $733B over 3 months — the pace held firm. Fixed Income was also strong at $11.2B for the week, with a flow imbalance of 63.5. Commodities pulled in $4.7B this week, punching well above their 3-month relative weight — flow imbalance at 78.3 suggests buyers are aggressive.

Active management continued to attract capital. Weekly inflows of $5B with an imbalance of 68.6 match the 3-month trend of $203B, the second largest strategy bucket after vanilla passive. Dividend strategies added $876M this week and carry a strong 3-month total of $13.2B. Price-weighted strategies were the only notable outflow at $1.4B this week, reversing 3-month gains.

Overall, the tone is cautiously risk-on — equities and commodities are taking in money, Tech is being trimmed, and Japan is the geographic trade of the moment.