- This document provides a summary of recent global fund flows framed within the broader economic and political context driving these dynamics. In addition, we examine Mexico’s flows relative to the most recent globally implemented strategies.
- Flows are shifting beyond the US. While US assets remain the main destination, inflows have slowed in 2025, with equities underperforming bonds. European sovereign bonds attracted strong inflows but have recently stagnated, while EM flows have steadily increased since 2020.
- USD and rates dynamics have been correlated with fund flows. The USD has depreciated against most currencies in 2025, consistent with weaker US flows to both equities and bonds. A DXY rebound cannot be ruled out if flows continue to recover, but this will ultimately depend on rate spreads, cyclical performance, and political risks. At the same time, the 10Y UST has displayed a positive correlation with flows, with investors typically reacting with a lag, while US equities have continued to rally despite receiving less inflows than in previous years.
- Shorter duration preference in US sovereign bonds. Investors have reduced US duration since mid-2024, favouring short-term sovereigns over long-term bonds. This shift is also seen in EMs, with developed Europe only recently moderating its longer-duration positioning.
- Mexico: muted foreign flows. Despite nearly USD5.7bn in equity outflows and USD2.9bn in sovereign bond outflows in 2025, the MXN has appreciated ~10%, the 10Y Mbono has rallied 140bp and the IPC has gained ~19%. Flows remain muted across most tenors, concentrated in TIIEs rather than cash, but the attractive carry and Banxico nearing the end of its easing cycle leave room for renewed foreign demand.