Momentum Builds, But Cracks Appear

Equity ETFs took in $65.9B last week. That dwarfs every other asset class. The pace is consistent with the 3-month trend, where equities absorbed $581B. Risk appetite is clearly on. But look closer and the picture gets more complicated.

Geography Flows

The U.S. led all regions with $18.2B in net inflows over the past week. Its flow imbalance sits at 54 — barely tilted positive. Japan was the standout performer on a relative basis. It pulled in $7.9B with an imbalance reading of 73.3, signalling genuine buying pressure. Over 3 months Japan has attracted $35.3B, confirming steady demand.

The sharpest reversal belongs to China. Over 3 months, China drew $40.7B in net inflows. That made it one of the biggest regional winners globally. But last week it flipped sharply, posting a $2.7B outflow with a flow imbalance of just 42.1. Short-term sellers are pushing back against the longer-term trend.

South Korea tells a similar story. Over 3 months it absorbed $34.4B. Last week it shed $2.6B, with a flow imbalance of 31 — firmly in outflow territory. Emerging Markets as a whole also reversed. They took in $20.5B over 3 months but lost $2.5B last week.

Developed Markets ex-U.S. bucked the trend. Its flow imbalance hit 99.4 last week, near-perfect buying pressure, on $3B of inflows. India continued bleeding, down $581M last week after mild 3-month outflows too.

Sector Rotation

Industrials was the clearest winner this week. It pulled in $1.6B with a flow imbalance of 71.8. Over 3 months, Industrials drew only $2.4B — meaning the weekly pace has accelerated sharply.

Consumer Discretionary attracted $939M. Its imbalance of 86.6 shows heavy one-sided buying. Real Estate added $872M, with a strong 80.2 imbalance.

Financials had the worst week among sectors. It bled $730M despite large gross volumes. Energy also lost $231M on the week. Over 3 months, Energy is the worst-performing sector by far, with $4.75B in net outflows. That selling has been persistent, not just a blip.

Tech led the 3-month sector table with $18.7B in inflows. But its weekly imbalance dropped to 56.9 — still positive, but losing intensity.

Asset Class & Strategy

Fixed Income pulled in $21.3B last week. Its 3-month total stands at $263.7B. Bonds are seeing sustained demand alongside equities — not a classic risk-off signal, but a broad reach for yield.

Commodities attracted $3.4B this week with a strong imbalance of 81.1. Alternatives also held firm at $2.8B.

On strategy, Momentum ETFs posted a 97.5 flow imbalance — the highest of any category tracked. They took in $6.5B last week. Vanilla passive funds shed $5.6B on the week despite dominating 3-month totals. Fundamental and Multi-factor strategies both recorded strong weekly inflows with imbalances above 87.

The overall tone is risk-on but selective. Rotation from EM into developed markets, and from passive into factor strategies, is the defining move this week.