Foreign inflows into US equity funds in June reached their strongest level in more than a year

Overview

This report is a weekly update from Nomura's Asia FX strategy team on high-frequency investor fund flows. It focuses on changes in foreign investor flows into US equity and bond funds, EM-focused ETFs, Korean retail investment in US portfolio assets, and Taiwan investor activity in locally listed USD bond ETFs. The key conclusion is that US equity flows strengthened significantly in June, while US bond funds and Taiwan USD bond ETFs experienced notable outflows.

Core views

The report finds that momentum in US equity fund flows remains strong: US equity ETFs and mutual funds attracted USD3.8bn in the week from 26 June to 2 July, up from USD1.5bn in the previous week; total June inflows reached USD13.8bn, the strongest level since USD16.1bn in January 2025. In contrast, US bond funds saw USD1.7bn of outflows during the week and USD2.7bn in June. EM-focused ETFs continued to record net inflows but slowed at the margin, Korean retail investors' net purchases of US portfolio assets remained small, while Taiwan investors sold USD bond ETFs heavily.

Analysis framework

The report uses ETF, mutual fund, locally exchange-listed product, and Korean retail trading data to construct a high-frequency fund flow monitoring framework. It compares net inflows and outflows across asset classes over five weekly trading sessions and on a monthly basis. The analysis focuses not on valuation models or earnings forecasts, but on using changes in fund flows to assess cross-asset risk appetite and regional allocation direction.

Methodology notes

• Fund flow trackingHigh-frequency investor fund flow monitoring

  Observing changes in cross-border capital allocation through ETFs, mutual funds, and locally listed products.

  The report tracks weekly and monthly net inflows and outflows for US equity funds, US bond funds, EM-focused ETFs, Korean retail trading in US assets, and Taiwan USD bond ETFs to assess flow momentum and risk appetite.

• Proxy variableProxy measure for foreign flows into US equity funds

  Using US-themed funds listed or registered outside the US as a proxy for foreign investor inflows into US equities.

  The report explains that this proxy is based on the assumption that US-themed funds listed or registered outside the US are primarily invested in by non-US retail and institutional investors.

• Comparative analysisWeekly and monthly sequential comparison

  Comparing the latest five trading sessions with the preceding five trading sessions, and June fund flows with those of previous months.

  This comparison helps identify whether flow momentum is continuing, slowing, or reversing—for example, stronger US equity inflows, slower EM ETF inflows, and a shift in Taiwan USD bond ETFs from modest inflows to substantial outflows.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• US equity ETFs and mutual funds

  Primary beneficiary asset

  Strengths

  June inflows reached USD13.8bn, the highest level since January 2025, with a further USD3.8bn of inflows in the latest week.

  Weaknesses

  The report notes that AI-related equities have weakened recently, which could disrupt subsequent momentum.

  Comparison

  Fund flows were significantly stronger than those of US bond funds.

  Risks

  If risk appetite weakens or AI-related equities continue to decline, flow momentum could slow.

• US bond ETFs and mutual funds

  Asset under flow pressure

  Strengths

  As part of US portfolio assets, they may still benefit from safe-haven demand or the attraction of yields.

  Weaknesses

  They saw USD1.7bn of outflows in the latest week and USD2.7bn in June, the largest monthly outflow since April 2025.

  Comparison

  This was in sharp contrast to the strong inflows into US equity funds.

  Risks

  Changes in interest rates, exchange rates, and risk appetite could continue to affect bond fund redemptions.

• EM-focused ETFs

  Still recording net inflows but slowing at the margin

  Strengths

  June inflows reached USD3.1bn, above USD2.5bn in May, driven mainly by EM equity funds.

  Weaknesses

  Weekly inflows fell to USD246mn, well below USD1.8bn in the previous week.

  Comparison

  Flow momentum was weaker than that of US equity funds, indicating a stronger preference for US equities.

  Risks

  Global risk appetite, the US dollar, and local emerging-market factors could affect future inflows.

• Korean retail investment in US equities and bonds

  Regional retail flow indicator

  Strengths

  Net purchases of US portfolio assets reached USD466mn in June, partially reversing net sales in May.

  Weaknesses

  Weekly net purchases were only USD21mn, remaining weak after USD49mn in the previous week.

  Comparison

  Net purchases of equities were partially offset by net sales of bonds.

  Risks

  Korean retail flows may be affected by exchange rates, the performance of US technology stocks, and local market risk appetite.

• Taiwan-listed USD bond ETFs

  Significant outflow pressure

  Strengths

  These products provide a high-frequency window into Taiwan investors' USD bond allocation behavior.

  Weaknesses

  Outflows reached USD975mn in the latest week and USD2.1bn in June, the highest level in more than two years.

  Comparison

  The direction of flows clearly reversed from modest inflows of USD61mn in the previous week.

  Risks

  USD interest rates, exchange-rate volatility, and bond price fluctuations could continue to drive redemptions.

Key data

• Weekly inflows into US equity fundsUSD3.8bnUS equity ETFs and mutual funds recorded inflows from 26 June to 2 July, up from USD1.5bn in the previous week.
• June inflows into US equity fundsUSD13.8bnThe highest monthly inflow since USD16.1bn in January 2025.
• Weekly outflows from US bond fundsUSD1.7bnUS bond ETFs and mutual funds recorded outflows from 26 June to 2 July, compared with USD132mn of outflows in the previous week.
• June outflows from US bond fundsUSD2.7bnThe highest monthly outflow since April 2025.
• Total weekly inflows into US-related fundsUSD2.1bnEquity inflows partially offset bond outflows.
• Weekly inflows into EM-focused ETFsUSD246mnDown from USD1.8bn in the previous week, indicating slower marginal inflows.
• June inflows into EM-focused ETFsUSD3.1bnMainly driven by USD2.3bn of inflows into EM equity funds, above total inflows of USD2.5bn in May.
• Weekly net purchases of US portfolio assets by Korean retail investorsUSD21mnComprising approximately USD160mn of net purchases of US equities and USD139mn of net sales of US bonds.
• June net purchases of US portfolio assets by Korean retail investorsUSD466mnPartially reversing net sales of USD568mn in May.
• Weekly outflows from Taiwan USD bond ETFsUSD975mnTurning from modest inflows of USD61mn in the previous week to substantial outflows.
• June outflows from Taiwan USD bondsUSD2.1bnThe highest level of outflows in more than two years.

Impact & implications

The composition of fund flows shows that foreign investor demand for US equities recovered significantly in June, potentially supporting the relative resilience of US equity assets. However, outflows from bond funds and substantial redemptions from Taiwan USD bond ETFs indicate funding pressure on fixed-income assets. EM ETFs continued to attract net inflows but at a slower pace, suggesting that risk appetite is not broad-based but is instead more concentrated in US equities.

Risks

• Fund flow data are high-frequency proxy indicators and do not equate to forecasts of fundamentals or long-term returns.
• US equity inflows are strong, but the report notes that AI-related equities have weakened recently, which could affect subsequent risk appetite.
• Outflows from US bond funds and Taiwan USD bond ETFs indicate funding pressure on fixed-income allocations.
• Slowing EM ETF inflows may indicate marginal cooling in emerging-market risk appetite.
• Exchange-rate volatility may affect the value, prices, and income of cross-border securities investments.
• The report discloses that third-party data and models may not have been independently verified by Nomura, and that historical performance and simulated results do not represent future performance.

What to watch

• Whether US equity ETFs and mutual funds continue to maintain weekly net inflows.
• Whether weakness in AI-related equities weighs on US equity flow momentum.
• Whether outflows from US bond funds expand or stabilize.
• Whether the slowdown in EM-focused ETF inflows is temporary or reflects a broader weakening trend.
• Whether redemptions from Taiwan USD bond ETFs continue and whether they reflect broader adjustments in USD bond allocations.
• Whether Korean retail investors continue shifting from US bonds to US equities.