Active Beats Passive as Japan Leads Global Inflows

The clearest story this week: active management is beating passive on flow metrics. Active ETFs pulled in $5.2B net over the past week. Vanilla (passive) strategies shed $5.0B. That gap is striking.

Over three months, both have attracted money, but active's flow imbalance score of 77 versus passive's 56 shows much stronger buying pressure on the active side.

Geography Flows

Japan is the week's top destination. It drew $4.2B in net inflows, with a flow imbalance of 74. Hong Kong followed at $3.5B net, imbalance at 82. Both markets are attracting capital decisively.

China is the sharpest reversal. The 3-month picture shows $34.9B in net inflows. This week, China flipped to a $3.1B net outflow, with a flow imbalance of just 36. That is a meaningful trend break.

South Korea is also losing ground. $1.4B left Korea-focused ETFs this week. Taiwan shed $903M. Both were on the receiving end of steady inflows over the 3-month window.

U.S.-focused ETFs showed a small net outflow of $1.7B on the week. Gross flows were large — $38.4B in and $40.1B out — signalling high churn rather than directional conviction. Over three months, U.S. ETFs remain the biggest destination at $291.7B net.

Sector Rotation

Information Technology saw the hardest selling this week. It posted a $2.4B net outflow with a flow imbalance of just 39. That stings — over three months, Tech has been the top-receiving sector at $46.3B net.

Energy is the opposite story. It collected $831M net this week, up from a $4.1B outflow over three months. Buyers are coming back into energy after a rough quarter.

Health Care held steady in both windows: $356M net inflow this week, $7.0B over three months. Utilities also attracted $177M this week and $1.3B over three months.

Materials weakened this week with $964M in net outflows. Industrials slipped $170M, a reversal after $3.3B in 3-month inflows.

Asset Class and Strategy

Fixed Income is the asset class winner this week. It topped all categories at $9.9B net, flow imbalance of 62. Over three months, bonds have taken in $221.5B. Equity ETFs added $9.2B this week but the imbalance score of 53 is weaker — near balanced, suggesting mixed conviction.

Commodities picked up $4.3B this week at a 76 imbalance score, the strongest buying pressure of any major asset class. Over three months, commodities are more muted at $5.5B net.

Within strategies, dividend funds are drawing steady buying. $1.0B inflow this week and $13.0B over three months, with consistent imbalance scores above 67.

The overall tone is cautiously risk-on. Money is moving into bonds, commodities, Japan, and energy. But the rotation away from China, Tech, and passive US equity exposure signals that the buying is selective, not broad.