Mumbai: India-focused funds recorded their highest weekly outflow in seven weeks at $496 million following the latest US Federal Reserve rate decision, as global investors appeared to favour US equities while emerging-market funds faced renewed redemptions, according to Elara Capital.
The brokerage said the shift in fund flows came after the Federal Reserve raised interest rates by 25 basis points. It noted that the rate increase was accompanied by a resilient US growth backdrop rather than being a response to weakening economic conditions.
The latest data highlights a divergence between US-focused funds and emerging-market assets, with investors directing substantial amounts of capital towards US domestic exchange-traded funds (ETFs).
US funds record three-month high inflows
US-focused funds attracted $64 billion during the week, marking their strongest weekly inflow in three months, according to Elara Capital.
Most of the money flowing into US funds was directed towards domestic ETFs, suggesting that investors continued to seek exposure to US equities following the Federal Reserve’s rate decision.
In contrast, global emerging-market (GEM) funds recorded their first weekly outflow in 10 weeks. Redemptions from these funds stood at $877 million during the week.
Elara said the contrasting flow pattern could point to a relative reallocation of capital towards US equities. The brokerage linked the movement to the combination of the Fed’s 25-basis-point rate hike and the relatively resilient US economic growth environment.
High-yield bond funds see largest outflow in six months
Global high-yield bond funds recorded an outflow of $2 billion during the week, their largest redemption in six months.
The outflow coincided with the Fed’s rate hike and a renewed increase in US Treasury yields. Elara, however, said the latest redemption remained relatively modest compared with the much larger outflow cycle seen between October 2021 and October 2023, when US Treasury yields entered a sustained period of increase.
The brokerage said other periods of high-yield outflows, including February-April 2026 and March-April 2025, were largely driven by specific events such as geopolitical tensions and tariff-related shocks.
According to Elara, the US 10-year Treasury yield returned to around 5% and briefly crossed that level during the week, reaching its highest point since 2007.
The brokerage said a sustained move above the 5% yield zone could create additional pressure on high-yield valuations and potentially lead to faster redemptions, particularly as monetary policy remains tight while inflation stays elevated.
India-focused funds record seven-week high outflow
India-focused funds witnessed outflows of $496 million during the week, the highest weekly redemption in seven weeks.
Elara said the movement could reflect additional pressure arising from the recent rise in crude oil prices. Higher crude prices can be an important factor for India because the country imports a substantial share of its crude oil requirements.
The selling was almost evenly divided between long-only funds and ETFs. Long-only funds recorded outflows of $251 million, while ETFs saw redemptions of $245 million.
The figures indicate that the selling was not concentrated in a single type of India-focused investment vehicle.
South Korea sees sharp withdrawal
South Korea-focused dedicated funds recorded an outflow of $2.5 billion, their largest weekly redemption in 22 weeks.
Elara said the flow trend had deteriorated after remaining relatively strong for an extended period. The scale of the withdrawal placed South Korea among the markets experiencing the strongest selling pressure in the latest period covered by the brokerage’s analysis.
Taiwan-focused funds, meanwhile, attracted $1.7 billion of inflows. However, Elara said the underlying flow trend in Taiwan was also beginning to show signs of moderation.
The contrasting movements in South Korea and Taiwan indicate that investor demand within Asian markets was uneven even as capital continued to move towards selected markets.
Consumer goods and industrial funds attract demand
Global Consumer Goods funds attracted $1.37 billion during the week, their largest inflow since April 2023.
The inflow marked a notable change after the sector had experienced a prolonged period of outflows beginning in July 2023.
Global Industrial funds also recorded strong investor demand, attracting $1.2 billion during the week. Elara said this was the sector’s strongest inflow in six weeks.
The brokerage also highlighted the technical position of the Global Industrial index, which had moved marginally below its 200-day moving average for the first time since March 2025.
A move below a long-term moving average is closely watched by market participants as a technical indicator, although it does not by itself determine the future direction of an index.
Gold records 11th straight week of inflows
Gold continued to attract strong investor interest despite the divergence across equity and credit markets.
Gold funds recorded inflows of $3.4 billion during the week, marking their 11th consecutive week of positive flows.
The sustained demand indicates continued investor interest in the precious metal even as capital movements following the Federal Reserve’s rate decision favoured US assets in some categories and triggered withdrawals from several emerging-market and high-yield funds.
The latest fund-flow data therefore presents a mixed picture of global investor positioning. US funds experienced a sharp increase in inflows, while emerging-market and high-yield funds recorded renewed redemptions. India-focused funds also saw withdrawals accelerate, with the $496 million outflow marking a seven-week high.
Elara Capital’s observations suggest that the Federal Reserve’s policy decision and movements in US Treasury yields remain important factors for global capital allocation. At the same time, crude oil prices, sector-specific trends and technical indicators are also likely to influence investor flows across emerging and developed markets.