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Summary of Investor Positioning and Flows - 24 October 2025

Core Content

This document provides an overview of the current state of global investor positioning and fund flows as of 24 October 2025. It highlights the behavior of discretionary and systematic investors, the performance of specific asset classes, and the impact of recent market events on equity and bond fund inflows.

Main Points

Investor Positioning

• Discretionary Investors:

  • Equity positioning rose modestly this week (0.15sd, 50th percentile), but remains close to neutral after sharp cuts last week.
  • Net call volume decreased, driven by single stock options and to a lesser extent by ETF options, while index options showed a slight increase.
  • The call to put volume ratio (5d ma) fell to the 68th percentile.
  • Investor sentiment remained net bearish, with a slight increase in bullish responses and a decrease in bearish responses.
  • The bull minus bear spread rose from last week's sharp drop but still remained net bearish at the 25th percentile.

• Systematic Strategies:

  • Volatility control funds increased their equity allocation after deep cuts last week (64th percentile).
  • CTAs reduced their equity long positioning for the fourth consecutive week (75th percentile), with cuts across all regions.
  • Bond short positioning increased, while short positions in FX and commodities decreased.
  • Risk-parity funds decreased their equity allocation, mainly due to cuts in EM and non-US developed markets, while increasing bond and inflation-protected note allocations.

Fund Flows

• Equity Funds:

  • Received $14.2bn in inflows for the sixth consecutive week, driven by the US ($13.3bn) and Europe ($2.0bn).
  • Tech ($3.5bn) and Materials ($1.7bn) funds led the inflows, with all dedicated sector funds receiving inflows.
  • Gold funds had record inflows before the selloff ($6.4bn).
  • EM and China saw outflows for the first time in 10 weeks (-$1.5bn and -$1.8bn respectively).

• Bond Funds:

  • Received $17.2bn in inflows, with a pickup in bond fund flows after last week's lull.
  • Broad-mandate funds and Govt bonds saw accelerated inflows.
  • IG bonds had inflows ($3.8bn), while HY bonds had outflows (-$2.8bn).
  • EM bonds saw a resumption of inflows after last week's outflows ($0.8bn).
  • Munis received strong inflows ($2.2bn), while Bank Loans and MBS had small outflows.

• Money Market Funds:

  • Received $23.6bn in inflows, mainly in the US ($30.4bn), with outflows from Europe (-$10.7bn).

Key Information

• Market Performance:

  • A basket of stocks with the highest net call volume in the prior week significantly underperformed.
  • A basket of the most-shorted stocks also underperformed, indicating further unwinding of momentum chasing.

• Sector Positioning:

  • Overweight sectors: Utilities (0.50sd, 80th percentile), Energy (0.37sd, 83rd percentile), MCG & Tech (0.27sd, 68th percentile).
  • Underweight sectors: Materials (-0.15sd, 51st percentile), Real Estate (-0.24sd, 41st percentile), Healthcare (-0.24sd, 44th percentile), Industrial Cyclicals (-0.45sd, 32nd percentile), and small caps (-0.21sd, 42nd percentile).

• Equity Fund Beta to S&P 500:

  • Blended mutual funds showed a beta to the S&P 500.
  • Equity L/S HFs also displayed a beta to the S&P 500.

• Cross-Asset Futures Positioning:

  • Non-commercial positions in FX and bonds, (Asset managers + Lev funds) in equities, and Managed Money in commodities.
  • Positioning data as of 23 September 2025.

• Earnings Outlook:

  • Q3 2025 earnings season is expected to deliver a solid pickup in growth to over 13% yoy.
  • This is a positive indicator for discretionary investors, who may increase exposure if growth remains robust.

Summary of Key Trends

• Discretionary investors remain underweight but are slightly increasing their exposure.
• Systematic strategies, particularly CTAs and risk-parity funds, are adjusting their positions in response to market volatility.
• Equity fund inflows are continuing, but the pace has slowed, with the US being the primary driver.
• Gold funds had record inflows before a selloff, indicating strong investor interest.
• Bond fund inflows are picking up, with notable flows into Govt bonds, IG, and EM bonds.
• Money market funds saw significant inflows, mainly from the US.
• Sector-specific fund flows showed a shift towards Tech and Materials, with notable inflows into all dedicated sector funds.
• Investor sentiment remains net bearish, but there is a slight increase in bullish responses.
• Volatility control funds are becoming less sensitive to further market selloffs.

Conclusion

The market is experiencing a mix of cautious optimism and strategic adjustments from both discretionary and systematic investors. Equity fund inflows continue, but the pace is slower than previous weeks, with the US leading the way. Systematic strategies are showing signs of caution, particularly in equities, while bond flows are increasing. The overall sentiment remains bearish, but there is a slight improvement in bullish sentiment. Sector-wise, there is an overweight position in Utilities, Energy, and MCG & Tech, while others like Materials and Real Estate are underweight. The performance of momentum-driven baskets and the impact of earnings growth are also significant factors influencing investor behavior.