Asia Leads as Active Funds Fall From Grace

China and Japan pulled in a combined $21.3B in ETF flows last week. That eclipsed every other geography and set the tone for a market tilting clearly toward Asia and away from passive active strategies.

Geography Flows

China was the top destination globally, drawing $14.6B of net inflows in the week to 25 October. Flow imbalance hit 77.5 out of 100, meaning buying pressure was heavy and consistent. Japan added $6.7B with an imbalance of 87, one of the highest readings in the entire dataset.

Taiwan pulled in $3.6B over the week, with a near-perfect imbalance reading of 95.3. That figure sits alongside an extraordinary piece of real-economy data: Taiwan's export orders reached TWD 36,223 hundred millions in September 2026, the largest September reading on record since 1984, according to ORTEX Alt Data. The previous best was TWD 21,377 hundred millions, set a year earlier. Export orders by product group also hit an all-time high at USD 95,691M, above the prior record of USD 84,274M. The structural demand story backing Taiwan's tech supply chain appears to be reinforcing ETF inflows in real time.

South Korea added $3.9B on the week. The U.S., despite dwarfing all others on a 3-month basis at $288B net, attracted $14B in the week, a broad but less concentrated flow.

The sharpest reversal was in Emerging Markets overall, which saw a $2.2B outflow on the week. Over three months, the same bucket was positive to the tune of $12.5B. That flip is the clearest trend break in the geography data. Japan also reversed sharply: a $8B outflow over three months, compared to a $6.7B inflow last week.

Sector Rotation

Information Technology led all sectors with $7.6B of net inflows over the week. That contrasts with a much tighter 3-month picture of $15.8B, suggesting the weekly pace has accelerated sharply. The sector's imbalance reading of 63.9 is positive but not extreme.

The picture elsewhere was negative. Utilities lost $1.2B, with a flow imbalance of just 12.5, meaning almost all traffic was outbound. Financials shed $1B. Consumer Discretionary and Consumer Staples each lost roughly $700-800M.

Energy was the notable exception among defensives, pulling in $591M on the week. Over three months, Energy has gathered $2.3B, making it one of the more consistent recipients.

The 3-month sector view shows Financials as the heaviest loser at $9.5B outflow. Industrials also bled $1B over three months and a further $124M last week. Real Estate and Health Care are both positive over three months, a reversal from their near-flat weekly readings.

Asset Class and Strategy

Equity dominated with $47.4B of net ETF inflows on the week. Fixed Income added $20.3B, a solid reading with an imbalance of 70.5. Commodities flipped to a $1B outflow on the week, despite being strongly positive at $33.4B over three months. That short-term reversal warrants watching.

The most striking strategy shift is in active management. Active funds absorbed $147.5B over three months, second only to Vanilla passive at $219.9B. But last week, Active saw a $9.2B outflow, the only major strategy in the red. Vanilla, by contrast, pulled in $36.3B and carried an imbalance of 65.2. Growth and Value strategies both attracted money on the week, at $3B and $1.8B respectively, consistent with their 3-month trends.

The overall tone is risk-on with a regional twist: investors are buying tech, buying Asia, staying with bonds, and rotating out of active allocation funds after a strong 3-month run.