The Alternate Opinion :US flows rebound post-Fed, but EM & High yield face redemption; Strong inflows into Gold funds for 3rd month by Elara Capital
US funds saw a sharp $64bn rebound in inflows (@3-month high) following the Fed's Sep'16 rate hike, while GEM funds recorded their first outflow in 10 weeks of $877mn. The divergence suggests that the Fed decision may have triggered a relative reallocation toward US equities, as the 25bp hike was accompanied by a resilient growth backdrop rather than signalling economic weakness. Most US inflows were into domestic ETFs
Global High Yield bond funds recorded their largest outflow in six months at $2bn this week, coinciding with the Fed's rate hike and a renewed rise in US Treasury yields. The recent episode is still modest compared with the much larger redemption cycle between Oct'21 and Oct'23, when US yields embarked on a sustained multi-year rise. The intervening outflow episodes in Feb–Apr'26 and Mar–Apr'25 were largely event-driven, linked to geopolitical and tariff-related shocks. The current setup is therefore worth watching as a potential transition from event-driven to rates-driven pressure. The US 10-year yield has now returned to ~5%, around its 2023 highs, and briefly breached 5.0% this week—the highest level since 2007. With the Fed now also tightening while inflation remains elevated, a sustained break above this yield zone could put further pressure on high-yield valuations and potentially accelerate redemptions
S Korea dedicated funds recorded 22-week large outflow of $2.5bn with the flow trend deteriorating after a long time. Taiwan dedicated funds attracted $1.7bn of inflows, although the underlying trend is also showing early signs of moderation. India-focused funds saw outflows accelerate to a 7-week high of $496mn, potentially reflecting additional pressure from the recent rise in crude oil. Selling was evenly split between long-only funds ($251mn) and ETFs ($245mn)
Global Consumer Goods funds attracted largest inflow since Apr’23 of $1.37bn following a prolonged outflows since Jul’23. Global Industrial funds saw 6-week high inflow of $1.2bn. The Global Industrial index has moved marginally below its 200DMA for first time since Mar'25, making the technical setup important. Meanwhile, Gold recorded 11th week of inflows, with a strong $3.4bn addition this week.
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