Money Flows Into Bonds and Energy as Tech Bleeds

A sharp $2.2B weekly outflow from Information Technology ETFs marks the biggest sector reversal this week. This is a notable shift. Over three months, Tech attracted $48.8B in net inflows — the strongest of any sector. Now that momentum has stalled hard.

Geography: US Holds, China Reverses

The US remains the dominant destination for ETF money. It pulled in $5.7B net this week. Japan was close behind at $4.2B, with a high flow imbalance score of 74 — a strong buying signal. Hong Kong attracted $3.5B, with buying pressure even stronger at 83.

China tells a different story. Over three months, it drew $35.2B in net inflows — a clear trend. But this week it shed $3.1B, flipping to outflows. South Korea also reversed. It was a solid 3m winner with $41.1B in net inflows. This week it lost $1.4B. Both shifts point to profit-taking in Asian growth markets.

Emerging markets broadly held up. They posted $1.5B in weekly net inflows with a flow imbalance of 94 — almost entirely buying. That selective EM bid remains intact even as China pulls back.

Sector Rotation: Energy and Defensives Take Over

Energy ETFs took in $797M this week. Over three months, the sector bled $4.6B in outflows. That is a clean reversal. Utilities added $193M this week, extending their mild 3m positive trend.

Health Care gained $381M this week and $7.4B over three months. It is one of the few sectors showing consistent demand across both timeframes.

Materials fell $952M this week despite a positive 3m reading. Industrials dipped $196M on the week, though the 3m picture remains modestly constructive at $3.5B.

Consumer Discretionary saw $299M in outflows this week. Its 3m tally was barely positive. That combination suggests consumer spending exposure is being trimmed.

Asset Class and Strategy: Bonds Stay Strong

Equities dominated in absolute terms. They attracted $18B net this week. But fixed income flows are where the signal lies. Bonds pulled in $10.4B on the week, with a flow imbalance of 64 — comfortably in buying territory. Commodities drew $4.3B, their highest weekly flow imbalance at 76. Over three months, commodities were nearly flat. The sudden pick-up this week is worth watching.

Active strategies led among fund types. They took in $5.2B this week, maintaining strong 3m momentum of $202.8B. That is roughly 59% of vanilla passive flows — and the gap is narrowing. Dividend ETFs added $859M on the week, consistent with their 3m trend of $13.1B.

Growth and Momentum strategies, positive over three months, both slipped into mild outflows this week. That aligns with the broader rotation away from richly valued growth names.

Overall, the tone is cautious rotation. Investors are reducing concentrated tech and China risk. They are moving toward bonds, energy, and dividend strategies — a modest but clear risk-off tilt.