Japan Flips: China Leads the Week

The sharpest story in this week's ETF flows is a regional reversal. Japan was the third-largest geography by net inflows over 1 week, pulling in $6.5B with a flow imbalance of 91.9. Over three months, Japan posted a net outflow of $15.3B. That is the biggest trend flip in the geography data.

China held the top spot on the week with $11.1B of net inflows and a flow imbalance of 70.8. Over three months, China's net flow was $34.7B, so the buying impulse is consistent and this week's reading is part of a sustained move. The US attracted $10.0B on the week, remaining the dominant three-month destination at $272B net.

Brazil reversed sharply. Over three months it recorded $5.0B of net inflows. This week it posted an $871M outflow, with a flow imbalance of just 31.3. India also stayed in outflow territory on both timeframes.

Geography Flows

Taiwan drew $2.4B this week, with a flow imbalance of 93.0. That reading confirms buying pressure remains strong in the semiconductor-heavy market. South Korea added $1.8B. Developed Europe attracted only $233M on the week, compared with $7.3B over three months. The pace of European buying has slowed noticeably. Israel saw $286M of net selling this week, extending a negative trend visible in the three-month data too.

Sector Rotation

Information Technology was the single largest sector outflow this week at $1.2B net negative. Over three months, IT was a net inflow of $3.1B. That is a clear one-week reversal and the biggest sector divergence in the data. Financials flipped the other way. The sector pulled $1.1B in net inflows this week. Over three months, Financials posted the heaviest sector outflow in the entire dataset at $10.1B. Money is now moving back into banks and financial stocks after a quarter of heavy selling. Health Care attracted $719M this week and $3.3B over three months. The defensive bid is consistent. Consumer Staples shed $443M on the week. Utilities also lost $136M. Defensive sectors outside health care are being trimmed.

Asset Class and Strategy

Equity dominated both periods. This week equities took in $44.6B net. Fixed income added $12.4B. Over three months, equities absorbed $506B and fixed income $301B. Both are running strongly, pointing to broad risk appetite without a flight-to-safety trade. Commodities drew $354M on the week and $32.9B over three months.

On strategy, active funds pulled in $14.6B this week against vanilla's $18.9B. Over three months, active strategies absorbed $159B net, running at 82% of vanilla's flow on a much smaller asset base. That is a persistent and significant shift toward stock-picking and away from passive. Value strategies recorded a $2.5B outflow this week despite positive three-month flows of $8.4B. Growth drew $1.5B on the week. ESG was flat to negative on the week at minus $11M, but positive $9.6B over three months.

The overall tone is risk-on: equities and active strategies are absorbing money, Japan has sharply re-attracted buyers after a three-month exodus, and Financials are recovering ground lost across the quarter.