Summary of Global Fund Flows Industry Overview - The report discusses global fund flows for the week ending July 23, focusing on equity and fixed income markets, highlighting trends in investor behavior across different regions and sectors. Key Points Fund Flows into Equities - Global equity funds experienced modest inflows of $6 billion, an increase from $5 billion in the previous week [1] - Mixed flows were observed across G10 countries; US and Japan equity funds faced net outflows, while Euro area equity funds saw net inflows [1] - There is a notable trend of repatriation from US assets, with foreign demand for US equities significantly slowing down, particularly in Europe and Asia [1][2] - Emerging Markets (EM) saw strong demand, particularly in South Korea, which had the highest inflows, while Taiwan experienced the largest outflows [1] Fund Flows into Fixed Income - Global fixed income funds saw robust inflows of $27 billion, up from $17 billion the previous week, with both government and corporate credit products benefiting [1] - Over the past four weeks, bank loans have attracted the strongest inflows as a percentage of Assets Under Management (AUM) [1] - Investors have begun net purchasing inflation-protected securities in the last two weeks [1] Sector-Level Insights - There is a clear preference for cyclical sectors over defensive ones since early July, with industrials and financials attracting the strongest net inflows [1] - The divergence between flows into cyclicals and defensives has become more pronounced, indicating a shift in investor sentiment [1][4] Money Market and FX Flows - Money market fund assets increased by $14 billion [1] - Cross-border foreign exchange (FX) flows were strong, with the Euro attracting significant net foreign inflows [1] - In Asia, the Singapore Dollar (SGD), Taiwan Dollar (TWD), and Hong Kong Dollar (HKD) saw the strongest foreign inflows recently [1] Summary of Fund Flow Data - Total equity inflows for the four-week period amounted to $29.084 billion, with a weekly inflow of $5.798 billion [2] - Total fixed income inflows reached $86.605 billion, with a weekly inflow of $26.965 billion [2] - Money market funds had a total of $74.716 billion in inflows, with a weekly inflow of $13.707 billion [2] Additional Observations - The report indicates a shift in investor focus towards cyclical sectors, which may present potential investment opportunities [1][4] - The slowdown in foreign demand for US equities could pose risks for US markets, particularly if the trend continues [1][6] Conclusion - The current trends in global fund flows suggest a cautious but strategic repositioning by investors, favoring cyclical sectors and fixed income products while showing hesitance towards US equities. The data indicates potential opportunities in emerging markets and cyclical sectors, while also highlighting risks associated with the US market's attractiveness to foreign investors.

Investment Rating - The report maintains an overweight stance on Japanese equities, with unchanged end-2025 share price targets of TOPIX at 2,800 and Nikkei 225 at 40,000 [2][7][26]. Core Viewpoints - The report anticipates support for Japanese stocks in the second half of 2025 from corporate reforms, fund flows, and macroeconomic factors such as Fed interest rate cuts and a potential Japan-US tariff agreement [2][14][39]. - Two main themes are identified as structural support for Japanese equities: corporate reform and fund flows [3][14][59]. Summary of Key Themes Corporate Reform - Corporate reforms are accelerating, with share buybacks announced in FY2024 nearly doubling year-on-year, indicating a strong momentum for profitability [4][15][39]. - The total shareholder return ratio for Japanese companies has risen to 60%, with 16% of TOPIX companies exceeding a total return ratio of 100% in FY2024 [41][42]. - Balance sheet normalization could potentially boost corporate value by up to 20%, with expectations for ROE to rise to the mid-9% level by FY2026 [17][42]. Fund Flows - A significant rotation of funds from overseas to Japan is expected, driven by rising interest rates and a shift in investment strategies among public pension institutions and banks [5][60]. - The report highlights a historical outflow of funds from Japan to the US, with expectations for a repatriation of capital back to Japan, providing structural support for Japanese equities [25][60]. - Fund inflows are anticipated to continue as the yen appreciates, leading to a decline in overseas securities investment by individuals [61][62]. Sector Outlook - The report recommends a barbell strategy focusing on domestic demand sectors while seeking upside in semiconductors and machinery, depending on trade agreement outcomes [29][39]. - The performance of domestic demand-driven stocks has outpaced overseas demand-driven sectors during the recovery from the US tariff shock, with software, media, and food sectors leading the market [77].

Investment Rating - The report indicates a positive investment sentiment towards global equity and fixed income funds, with significant inflows observed in the latest reporting period [4][10]. Core Insights - Global fund flows into equity funds saw a substantial increase, with net inflows of $45 billion for the week ending June 18, compared to outflows of $10 billion in the previous week. This surge was primarily driven by strong demand from US investors for US equity funds [4][10]. - Fixed income funds also experienced increased inflows, totaling $19 billion, attributed to heightened demand for aggregate-type, mortgage-backed, and government bond funds. In contrast, money market fund assets declined by $12 billion [4][10]. - Emerging markets showed positive trends, particularly with mainland China funds turning positive and Brazil continuing to attract robust inflows. Sector-wise, technology funds recorded the strongest net inflows, while financials faced the largest outflows [4][10]. Summary by Category Equity Flows - Total equity inflows amounted to $31.3 billion over the four-week period, with a significant weekly inflow of $45.4 billion on June 18. Developed markets, particularly the US, saw notable inflows, while Japan experienced outflows [10][12]. - Technology sector funds led the inflows, while financials and healthcare sectors faced significant outflows [10][12]. Fixed Income Flows - Total fixed income inflows reached $70.8 billion, with a weekly inflow of $19.2 billion. Aggregate-type and mortgage-backed funds were particularly favored, while long-duration bond funds saw outflows [10][12]. - Emerging market local bond funds attracted strong inflows, indicating a positive sentiment towards these assets [10][12]. FX Flows - Cross-border FX flows totaled $58.2 billion, with G10 currencies showing strong demand, particularly for the Korean won, which saw the largest net inflows in z-score terms [12][13]. - The report highlights subdued inflows for the US dollar, contrasting with robust inflows for other currencies like the euro and British pound [12][13].

Investment Rating - The report indicates a negative trend in global equity fund flows, with net outflows of $10 billion for the week ending June 11, contrasting with inflows of $5 billion in the previous week [3] Core Insights - There were significant net outflows from equity funds, particularly in G10 markets, while fixed income funds experienced robust inflows, particularly in emerging markets [3][9] - Emerging market local currency bond funds saw strong inflows, indicating a preference for these assets amidst the broader market trends [3][9] - The report highlights a shift in investor preference towards short-duration bond funds over long-duration options [3][9] Summary by Sections Global Fund Flows - Total equity experienced net outflows of $18.2 billion over the past four weeks, with a weekly outflow of $10 billion [9] - Fixed income funds saw inflows of $77.1 billion, with $15.1 billion in the latest week, driven by demand for credit products [9] - Money market funds had a decline of $9.1 billion in assets [9] Equity Flows - Developed markets saw significant outflows, particularly from US equities, which had outflows of $24.2 billion [9] - Emerging markets showed mixed results, with mainland China experiencing outflows of $7.2 billion, while Taiwan and Brazil saw inflows of $4.7 billion and $0.8 billion respectively [9] Fixed Income Flows - Total fixed income inflows were $77.1 billion, with $64.2 billion from developed markets [9] - Emerging market fixed income funds had inflows of $10.8 billion, with local currency bonds being particularly favored [9] FX Flows - Cross-border FX flows remained elevated at $56.4 billion, with G10 currencies attracting strong inflows [11] - The report notes that the South Korean won (KRW) saw the strongest net inflows among Asian currencies [11] Sector Flows - Consumer goods funds saw the largest net inflows, while technology funds experienced the greatest net outflows [3][9] - The report indicates a notable preference for sectors such as consumer goods and utilities, contrasting with the outflows from technology and financial sectors [9]

Investment Rating - The report does not explicitly state an overall investment rating for the industry or specific assets [4]. Core Insights - The S&P 500 experienced its best May performance since 1990, indicating strong market sentiment [9]. - US goods imports saw a significant drop of 20% in a month, marking the largest decline ever recorded [9]. - Bloomberg's Fedspeak index has reached its most dovish level in over four years, suggesting a shift in monetary policy outlook [9]. Summary by Sections Equities - S&P 500 forecasted returns range from -15.8% (bear case) to 23.1% (bull case) with a base case return of 19% [4]. - MSCI Europe shows a bear case of -22.8% and a bull case of 23.6%, with a base case return of 16% [4]. - Emerging Markets (MSCI EM) forecasted returns range from -22.1% to 20.2%, with a base case return of 16% [4]. Foreign Exchange - The JPY is forecasted to depreciate to 144 in the bear case and appreciate to 130 in the bull case, with a base case of 143 [4]. - The EUR is expected to range from 1.13 (bear) to 1.25 (bull), with a base case of 1.14 [4]. Rates - The 10-year UST yield is forecasted to range from 4.40% (bear) to 3.45% (bull), with a base case of 4.00% [4]. - UK 10-year yields are expected to range from 4.65% (bear) to 3.95% (bull), with a base case of 4.35% [4]. Credit - US Investment Grade (IG) credit spreads are forecasted to tighten from 88 bps (bear) to 90 bps (bull), with a base case of 130 bps [4]. - US High Yield (HY) spreads are expected to range from 315 bps (bear) to 335 bps (bull), with a base case of 475 bps [4]. Commodities - Brent crude oil is forecasted to range from $64 (bear) to $55 (bull), with a base case of $45 [4]. - Gold prices are expected to range from $3,278 (bear) to $3,250 (bull), with a base case of $2,760 [4]. Market Sentiment Indicator (MSI) - The MSI aggregates survey positioning, volatility, and momentum data to quantify market stress and sentiment, indicating a current negative sentiment [50][55]. Cross-Asset Positioning - In US equities, asset managers are net long at 27%, while hedge funds are net short at -7% [63]. - In commodities, positioning shows 25% net long in gold, while 7% net long in Brent [63]. Cross-Asset Correlations - The current global correlation index stands at 43%, indicating a slight increase from the previous month [72]. - Equity correlations are at 70%, while credit correlations are at 80%, reflecting strong interdependencies [72]. ETF Flows - US equities saw a net inflow of $0.7 billion over the past week, while world equities had a net inflow of $0.8 billion [37]. - Bond markets experienced a significant inflow of $15.1 billion, indicating strong demand for fixed income [37]. Volatility Monitor - The implied volatility for the S&P 500 is currently at 17.0%, reflecting market expectations of future volatility [96]. - Major equity markets show varying levels of volatility, with the Nasdaq at 21.2% [96]. Overall Market Performance - Major developed market equity indices posted gains, with TOPIX up 2.4% and NASDAQ up 2% [98]. - Commodity markets generally posted losses, with copper down 3.3% [98].

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific assets [3]. Core Insights - The S&P 500 is forecasted to reach 6,500 by Q4 2025, representing a total return of 15.6% with a volatility of 19% [3]. - The report highlights a mixed performance across global equity markets, with the DAX outperforming at +3.8% and technology sectors leading at +4.3% [101]. - The US Dollar experienced a significant decline of 4.55% in April, marking its second worst monthly performance in 15 years [9][101]. - Credit spreads tightened for US and EU high-yield bonds, while spreads widened for investment-grade indices [101]. Summary by Relevant Sections Equities - S&P 500: Current level at 5,687, forecasted to 6,500 with a return of 15.6% [3]. - MSCI Europe: Current level at 2,137, forecasted to 2,150 with a return of 3.8% [3]. - Topix: Current level at 2,688, forecasted to 2,600 with a return of -0.8% [3]. - MSCI Emerging Markets: Current level at 1,133, forecasted to 1,050 with a return of -4.6% [3]. Fixed Income - UST 10-year yield forecasted to decrease to 4.00% from 4.31%, with a total return of 6.8% [3]. - US Investment Grade (IG) credit spread at 102 bps, forecasted to tighten to 95 bps with a return of 1.5% [3]. Commodities - Brent crude oil forecasted to decrease to $57.5 from $61, with a return of -5.2% [3]. - Gold forecasted to increase to $3,500 from $3,250, with a return of 5.3% [3]. Currency - JPY forecasted to appreciate to 141 from 145, with a return of 1.0% [3]. - EUR forecasted to depreciate to 1.08 from 1.13, with a return of -6.5% [3]. Market Sentiment - The report indicates a negative sentiment in the market, with the Market Sentiment Indicator (MSI) reflecting stress and positioning data [54][58].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Chinese equities experienced a significant outflow of US$5.3 billion from foreign long-only funds in April, reversing a two-month inflow trend since February [11] - The outflow was primarily driven by passive funds, which saw outflows of US$3.7 billion, and active funds, which had outflows of US$1.6 billion [11] - Cumulative foreign passive inflows since October 2022 have reverted to levels similar to late February 2025, with April outflows reversing approximately 50% of the inflows from March 2025 [11] - Active fund managers increased their underweight positions in China, with global funds down 1.3 percentage points, AxJ funds down 2.0 percentage points, and EM funds down 3.2 percentage points [11] - Domestic passive funds targeting China A-shares recorded a massive inflow of US$27 billion in April, marking the highest monthly inflow since 2024 [11] - The Southbound Stock Connect program maintained strong momentum with US$21 billion in April, bringing the net inflow for the first four months of 2025 to US$77 billion [11] Fund Flows - In April, foreign domiciled funds saw a total outflow of US$5.3 billion, with passive funds contributing US$3.7 billion and active funds contributing US$1.6 billion [11] - The report indicates that the northbound net flow data was terminated as of August 19, 2024, and suggests using foreign passive funds flow to CSI 300 as a proxy for historical northbound net flow [13] - As of April 30, 2025, US$0.4 billion in short interest was added in China offshore/HK equities, primarily in the Energy and Industrials sectors [13] Sector and Company Positioning - Active fund managers increased their positions in Household & Personal Products while reducing their holdings in Media & Entertainment and Insurance [11] - The most added companies by active fund managers included Alibaba, BYD, Trip.com, and China Construction Bank, while Tencent and Xiaomi were the most trimmed [11] - The report highlights that the top holdings among long-only EM and China active managers include Tencent Holdings, Alibaba Group, and Meituan, with notable changes in their active weights [42]

Investment Rating - The report indicates a positive investment sentiment towards US Treasuries, with strong inflows observed in this segment [2][4]. Core Insights - Global fund flows showed a net inflow into equities of $9 billion for the week ending April 23, an increase from $8 billion the previous week, driven by reduced outflows from US equity funds [4]. - In fixed income, net outflows were significantly reduced to $0.8 billion from $21 billion in the prior week, with government bond funds continuing to attract inflows [4]. - Emerging markets saw positive flows into mainland China funds, while Taiwan maintained strong net inflows [4]. - Cross-border FX flows turned positive, indicating an improved risk appetite among investors, favoring currencies such as USD, EUR, GBP, and CNY [4]. Summary by Category Equity Flows - Total equity inflows amounted to $68,079 million over four weeks, with a weekly inflow of $9,164 million [10]. - Developed markets saw inflows of $34,063 million, while emerging markets recorded inflows of $27,140 million, with mainland China leading at $24,686 million [10]. - Sector-wise, technology funds experienced the largest inflows of $14,845 million, while financials and healthcare saw significant outflows [10]. Fixed Income Flows - Total fixed income experienced outflows of $32,369 million, with government bonds attracting inflows of $29,366 million [10]. - High yield bonds faced substantial outflows of $23,488 million, while short-duration bonds saw inflows of $29,804 million [10]. FX Flows - Total FX flows recorded a net outflow of $4,751 million, with G10 currencies showing mixed results [12]. - The USD faced outflows of $3,440 million, while the EUR and GBP saw inflows of $2,880 million and $799 million respectively [12]. Fund Positioning - The report highlights a shift in fund positioning, with an increasing share of equity assets in total assets, indicating a growing preference for equities over fixed income [20][27]. - The share of money market fund assets as a percentage of global mutual fund assets has also seen fluctuations, reflecting changing investor sentiment [20].

Investment Rating - The report provides a base case forecast for various asset classes, indicating a positive outlook for equities, particularly the S&P 500, which is projected to reach 6,500 by Q4 2025, representing a total return of 24.5% [3]. Core Insights - Gold prices have reached a historic high, crossing the $3,300 per troy ounce mark for the first time [7]. - The DXY index has dropped to its lowest level since early 2022, indicating a weakening US dollar [9]. - The JGB 10s30s curve has reached its highest level in 25 years, reflecting significant changes in the Japanese bond market [13]. Summary by Sections Equities - S&P 500 is forecasted to reach 6,500 with a total return of 24.5% and a volatility of 19% [3]. - MSCI Europe is expected to reach 2,150 with a return of 9.9% and volatility of 16% [3]. - Emerging Markets (MSCI EM) is projected to decline slightly to 1,050 with a return of 1.1% [3]. Fixed Income - The 10-year UST yield is forecasted to decrease to 4.00% with a total return of 7.0% [3]. - US Investment Grade (IG) credit is expected to yield an excess return of 2.0% [3]. - US High Yield (HY) credit is projected to yield an excess return of 4.8% [3]. Commodities - Brent crude oil is expected to decline to $62.5 per barrel, reflecting a -4.0% return [3]. - Copper is projected to increase to $9,300 per ton with a return of 1.1% [3]. - Gold is forecasted to reach $3,500 per troy ounce, indicating a 2.6% return [3]. Currency - The JPY is expected to strengthen slightly to 141, with a return of 2.9% [3]. - The EUR is projected to decline to 1.08, reflecting a -7.3% return [3]. - The GBP is expected to decrease to 1.30, indicating a -2.2% return [3]. Market Sentiment - The report tracks daily fund flows across approximately 5,000 ETFs globally, covering around $7 trillion in assets, providing insights into cross-asset sentiment and positioning [21]. - Weekly US ETF flows to equities recorded their second lowest print since September of the previous year, indicating cautious investor sentiment [14].

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the global financial markets, particularly equities, fixed income, foreign exchange (FX), credit, and commodities. Core Insights and Arguments - **Equity Market Forecasts**: - S&P 500 is forecasted to reach 6,500 by Q4 2025, with a total return of 29.6% and volatility at 18% [3][3][3] - MSCI Europe is expected to rise to 2,150, with a total return of 12.0% and volatility at 16% [3][3][3] - Topix is projected to hit 3,000, with a total return of 23.5% and volatility at 19% [3][3][3] - MSCI Emerging Markets (EM) is forecasted to reach 1,200, with a total return of 13.1% and volatility at 16% [3][3][3] - **Fixed Income and Credit**: - UST 10-year yield is stable at 4.00%, with a total return forecast of 4.1% and volatility at 7% [3][3][3] - US High Yield (HY) is expected to yield a total return of 6.0% with a forecasted spread of 350 basis points [3][3][3] - **Commodities**: - Brent crude oil is projected to rise to 67.5, with a total return of 6.2% and high volatility at 39% [3][3][3] - Copper is expected to reach 9,800, with a total return of 10.9% and volatility at 21% [3][3][3] - Gold is forecasted to decline to 2,700, with a total return of -13.1% and volatility at 14% [3][3][3] - **Market Sentiment**: - The Morgan Stanley Global Risk Demand Index is at -4, indicating a deep 'fear' territory, suggesting a bearish sentiment across markets [7][10][10] - The decline in the S&P 500 has been more severe than the median bear market at this point in a sell-off [12][12][12] - **Recession Odds**: - Polymarket indicates a 60% probability of a US recession in 2025, reflecting growing concerns about economic stability [15][15][15] Additional Important Insights - **ETF Flows**: - The report tracks daily fund flows across approximately 5,000 ETFs globally, covering around $7 trillion in assets, providing insights into cross-asset sentiment and positioning [22][22][22] - **Positioning Summary**: - US equities show a net positioning of 28% among managers, while EM equities have a higher net positioning of 50% [61][61][61] - **Market Volatility**: - A spike in VIX during a large equities sell-off is noted, with current levels closer to the high end of a bear market range [8][8][8] - **Cross-Asset Correlations**: - The report includes a correlation framework to identify good portfolio diversifiers, emphasizing the importance of negative correlations to equities for risk management [80][80][80] This summary encapsulates the key points from the conference call, highlighting the forecasts, market sentiment, and positioning across various asset classes.