EM equity funds post second-largest weekly inflow on record

Global emerging market funds have attracted billions in fresh capital over the past two weeks, reversing a prolonged streak of outflows as investors moved to buy the recent correction in developing-world equities.

Record-Setting Flows Into EM Equities

Bank of America ↗ 0.21% strategists led by Michael Hartnett reported that emerging market equity funds pulled in $29.6 billion in the week through July 22, the second-largest weekly inflow on record, according to EPFR Global data cited in the firm's Flow Show note. China equity funds alone accounted for $21.3 billion — the third-biggest weekly inflow ever — while Korea added $1.5 billion, extending a run that has brought in a record $16.3 billion over four weeks.investing

The surge into emerging markets came as U.S. equities saw outflows resume at $7.2 billion and Europe reversed course with $1.6 billion in redemptions, suggesting a broader rotation away from developed markets. Separately, Elara Capital's Global Liquidity Tracker showed global emerging market funds attracted $3.7 billion over two consecutive weeks, reversing roughly 28% of the $13 billion redeemed over the prior 10 weeks.moneycontrol+2

India Shows Signs of Stabilization

India-focused fund flows showed early signs of stabilizing after cumulative outflows of $8.6 billion since February, according to Elara Capital's latest tracker published on July 24. ETFs led a modest net inflow of $17 million, marking a tentative turning point for a market that had seen sustained foreign selling throughout much of 2026.tradingview+1

The stabilization comes as foreign portfolio investors turned net buyers of Indian equities in July, investing over 15,157 crore rupees so far this month, supported by improving macroeconomic indicators, a stable rupee, and better global risk sentiment. India's equity mutual fund inflows also rebounded 26.5% month-on-month in June from their lowest level in a year, as easing Middle East tensions lifted sentiment.government.economictimes.indiatimes+1

A Broader Risk-On Shift

The flows reflect a wider shift in investor positioning. The July Bank of America Global Fund Manager Survey showed sentiment rising to its highest since February 2026, with a record 54% of managers expecting a "no landing" scenario for the global economy. Cash holdings fell to 3.6%, below the 4% threshold that triggers BofA's contrarian sell signal.atranicapital.substack

Tech funds drew $4 billion in the latest week, bringing four-week inflows to a record $52.8 billion, while Japan logged a seventh straight week of inflows. Hartnett flagged that the best trades for a potential reversal in boom expectations are long defensives, dividends, and duration — against short banks, brokers, tech, and industrials.investing