China Leads the Rush as Active Funds Surge

China ETFs absorbed $25.1B in net inflows in the past week. That is the single biggest geographic flow of the period, with a flow imbalance of 82.4, well above the threshold for strong buying pressure. The United States drew $20.8B, keeping it close behind. Over three months, the picture shifts: the US dominates at $286.6B, with China in third place at $57.9B. That is a sharp narrowing of the gap in just one week, suggesting China allocation is accelerating.

Geography Flows

Japan is the clearest reversal story. It pulled in $4.5B last week, with a flow imbalance of 88.1. Over three months, it posted an outflow of $21.8B, the only major geography in net negative territory over that window. Money that had been leaving Japan is now coming back fast. Taiwan also ran hot at $4.3B for the week, consistent with its three-month trend of $18.1B.

Europe flows remain modest. Developed Europe drew only $221M last week despite holding a positive three-month trend of $6.8B. Brazil flipped negative this week at minus $335M after a solid three-month inflow of $4.9B. India was virtually flat at plus $13M for the week, a soft reading against its three-month outflow of minus $766M. North America (ex-US) turned negative on the week at minus $452M.

Sector Rotation

Information Technology led all sectors with $2.6B in net inflows last week. Its flow imbalance of 59 is barely above neutral, however, reflecting heavy two-way trading across $8.5B in gross inflows versus $5.9B in gross outflows. Over three months, tech still leads at $11.8B, but the imbalance has fallen to 52.4, close to balanced. Financials attracted $884M last week, a sharp reversal from a three-month outflow of $9.5B. That is the biggest sector swing in the data.

Energy added $573M for the week and $2.8B over three months, with consistent positive flow. Health care drew $648M in the week. Materials was the week's worst sector at minus $637M, despite being marginally positive over three months at $785M. Industrials bled $373M this week and $1.5B over three months. Consumer Discretionary lost $364M. Real Estate was negative on the week but ran positive over three months at $1.9B.

Asset Class and Strategy

Equities dominate entirely. They pulled in $64.4B in net flows this week. Fixed Income added $4.2B. Over three months, the balance shifts meaningfully: equities at $536.5B versus fixed income at $285.7B. Bond funds are running at 53 cents of net flow for every dollar equities take in over three months, well above the one-week ratio of about six cents. That compression suggests some rotation toward safety is running below the weekly surface.

Commodities barely registered at $113M this week. Over three months they accumulated $32.7B, most of that likely driven by gold and energy exposure. Currency ETFs saw outflows of $1.1B this week after positive three-month flows of $6.9B.

On strategy, active funds are the standout. They took in $6.5B last week. Over three months they accumulated $159.3B, against $221.8B for passive vanilla funds. Active's three-month share is running at 72 cents per passive dollar, far above the weekly ratio of 15 cents. Growth strategies drew $3.6B this week and $20.3B over three months. Value added $1.2B on the week and $7.9B over three months. Momentum flipped negative over three months at minus $3.8B, though it was barely positive last week.

The overall tone is risk-on. Equities dominate across all timeframes, China is seeing accelerating demand, and active funds are capturing an outsized share of new money.