Money Chases China, Active Beats Passive

The dominant story this week is China. ETFs focused on Chinese equities pulled in $10.5B over the past seven days, with a flow imbalance of 72. That is the second-largest geography inflow in absolute terms, behind only the U.S. at $11.5B. Over three months, China has attracted $39.6B, making it the most compelling sustained bet outside the U.S. in any single geographic category.

Geography Flows

The U.S. remains the single biggest destination. $11.5B flowed in this week. Over three months, that figure stands at $281B, still comfortably the largest pool. Japan is the sharpest reversal. Over 1 week it attracted $4.4B, with a flow imbalance of 89. That stands against a three-month net outflow of $15.9B, a meaningful trend shift worth watching closely.

Taiwan added $3.7B this week and $15.7B over three months, with very high imbalance scores in both periods. Emerging Markets broadly took in $3.1B on the week. India is a sore spot. ETFs tracking India saw a net outflow of $24M this week and $797M over three months, consistent with weak underlying demand data. October two-wheeler registrations in India fell to 407,743 vehicles, the lowest October on record since 2017, according to registration data tracked by ORTEX Alt Data.

Brazil flipped sharply negative this week, losing $1.2B, despite having attracted $4.8B over three months. Israel also bled $325M on the week and $550M over the quarter. Europe drew modest inflows. Developed European ETFs added $158M on the week and $7.1B over three months, but Germany sits in outflow over both periods.

Sector Rotation

The biggest sector story is a sharp reversal in Technology. Information Technology ETFs shed $4.2B this week. That is the worst sector outflow by a considerable margin. Over three months, IT was a modest net receiver of $2.7B. The one-week reversal is stark and represents a clean break from the three-month trend.

Financials and Health Care picked up the money leaving Tech. Financials took in $1.7B this week. Health Care added $1.1B. That is a notable rotation given that Financials was the worst-performing sector over three months, bleeding $9.7B. The sector appears to be staging a short-term recovery.

Communication Services added $572M. Industrials pulled in $324M this week, a reversal from a three-month outflow of $935M. Energy, Materials, and Consumer Discretionary all bled modestly this week.

Asset Class and Strategy

Equities remain the dominant asset class. $38.9B flowed into equity ETFs this week, with a flow imbalance of 64.6. Fixed income added $8.0B this week, and over three months has pulled in $291B, making it the strongest sustained trend behind equities. Commodities attracted $650M this week.

The strategy picture shows a clear preference for active management. Active ETFs posted $7.4B of inflows this week, a flow imbalance of 74.3. Over three months, active strategies have taken in $159B, the second-largest strategy total. Value ETFs reversed sharply, shedding $1.9B this week despite attracting $8.5B over three months. Dividend strategies added $1.9B, with a high imbalance of 82. Growth added $2.4B this week.

The overall tone is cautiously risk-on. Equities lead, active beats passive, and Asia outside India is drawing fresh money. The Japan reversal and the Technology pullback are the week's clearest divergences from the three-month trend.