Foreign portfolio flows into US-focused funds and related cross-border investment flows: Foreign inflows to US-focused equities turned positive in late September

Overview

Nomura's weekly high-frequency flow update finds that foreign inflows into US-focused equity funds recovered in the 21-25 September period, following the hawkish September FOMC. The report contrasts this turnaround with modest US bond-fund inflows, renewed outflows from EM-focused ETFs, and softer activity from Korean and Taiwanese investors.

Core views

Foreign investors put USD444mn into US-focused funds between 21 and 25 September, reversing USD788mn of outflows in the preceding five sessions. The weekly total comprised USD201mn into US-focused equity ETFs and mutual funds and USD243mn into US-focused bond funds. Equity-fund flows represented the more pronounced reversal: USD201mn of inflows followed USD1.2bn of outflows in the previous week. For September month-to-date through 25 September, US-focused equity funds accumulated USD3.9bn, after a USD10.7bn inflow in August 2026. US-focused bond funds attracted USD677mn month-to-date, reversing August's USD1.0bn outflow, although their weekly USD243mn inflow was below the prior week's USD412mn. The report places the recovery in US flows against a weaker emerging-market pattern. EM-focused ETFs recorded USD305mn of net outflows during 21-25 September after USD112mn of net inflows in the prior week. The aggregate masked USD240mn entering equity funds and USD545mn leaving bond funds. EM-focused funds still recorded USD1.6bn of inflows month-to-date in September, but this was materially below the USD8.8bn inflow in August. Regional retail-flow indicators were also mixed. Korean retail investors net sold USD136mn of US portfolio assets during the week, made up of USD399mn of net US-equity selling and USD263mn of net US-bond buying. They remained net buyers by USD1.8bn month-to-date in September, but this slowed from USD3.8bn in August. Taiwan-listed ETFs invested in USD bonds received a modest USD18mn during the week, versus USD239mn in the prior week; Taiwanese investors' month-to-date net purchases of USD-denominated bonds were USD350mn, compared with USD476mn in August. Nomura derives its foreign-flow indicators from listed-fund proxies. Its US equity- and bond-fund proxies assume that US-focused funds listed on non-US exchanges are primarily held by non-US retail investors. Its EM proxy similarly assumes that EM-focused funds listed in non-EM markets are primarily held by foreign investors.

Analysis framework

The report tracks weekly and month-to-date ETF and mutual-fund flows, compares them with the immediately preceding week and recent monthly totals, and separates equity and bond flows. It supplements these fund-flow proxies with Korean retail purchases of US assets and Taiwanese flows into locally listed USD-bond ETFs.

Methodology notes

• Other

  High-frequency foreign-flow proxy based on fund listing location

  Nomura estimates foreign participation by treating US-focused funds listed on non-US exchanges as mainly held by non-US retail investors, and EM-focused funds listed outside EM markets as mainly held by foreign investors.

Key data

• US-focused fund flowsUSD444mnNet foreign inflows during 21-25 September, reversing USD788mn of outflows in the prior week.
• US-focused equity-fund flowsUSD201mnWeekly inflow after USD1.2bn of outflows in the previous week; September month-to-date inflows were USD3.9bn.
• US-focused bond-fund flowsUSD243mnWeekly inflow versus USD412mn in the prior week; September month-to-date inflows were USD677mn after USD1.0bn of August outflows.
• EM-focused ETF flows-USD305mnWeekly net outflow, comprising USD240mn into equity funds and USD545mn out of bond funds.
• Korean retail flows into US assets-USD136mnWeekly net selling, consisting of USD399mn of US-equity selling and USD263mn of US-bond buying.
• Taiwan ETF flows into USD bondsUSD18mnWeekly net inflow, down from USD239mn in the previous week.

Impact & implications

The report indicates that foreign demand for US-focused equities recovered over the latest five-session period, while US bond inflows remained positive but moderated. The contrast with EM ETF outflows and mixed Asian retail flows points to uneven cross-market portfolio positioning.