Follow the Flow Bonds lead the way

Follow The Flow Bonds lead the way

Inflows into bond funds accelerate despite the summer lull 14 August 2026

Multi-year highs in yields, combined with still-compressed rates volatility, have further Credit Strategy solidified the reach for bonds. Inflows have been recorded across high-yield, investment- Europe grade, sovereign and EM debt funds. However, higher “risk-free” yields have been Ioannis Angelakis pushing more assets into government bonds rather than credit, as tight spreads are not Credit Derivatives Strategist MLI (UK) providing the same strong incentive seen in 2024 and 2025. Over the past week… Barnaby Martin Credit Strategist High grade funds posted another strong week of inflows, suffering from outflows in MLI (UK) only one of the past 16 weeks. Short- IG funds recorded the lion’s share of inflows, while also mid- and long-term IG funds have also managed to record inflows last week. Note Mohit Agarwalla that mid-term funds registered their 18th consecutive weekly inflows. Long-term IG Credit Strategist funds have clearly underperformed this year recording outflows. MLI (UK) High yield funds recorded their fourth consecutive week of inflows; HY funds have only seen two weeks of outflows in the past 18 weeks. For European-domiciled funds, Euro- focussed HY funds saw materially stronger inflows than peers last week, with US- and Global-focussed HY funds also attracting inflows, but more modest. HY ETFs recorded inflows over the past week marking two consecutive weeks of inflows. Table 1:Weekly and YTD European retail flows Exhibit 1: Inflows across risk-assets over the last week Weekly fund flows data across assets % of AUM flows 1 0.40% This Wk YTD 0.34% Sector Week (%) YTD (%) 0.35% HY $296 0.1% $27 (0.0%) HY (ETFs) $210 0.4% $3,272 7.2% 0.30% IG $2,384 0.1% $40,593 1.9% 0.25% in euros $1,409 0.1% $16,181 1.4% 0.19% in sterling $401 0.1% $1,389 0.5% 0.20% in usd $49 0.0% $11,322 3.3% IG (ETFs) $809 0.3% $16,699 6.6% 0.15% 0.11% Loan $134 0.7% $3,170 18.2% 0.09% Govies $2,930 0.3% $47,657 5.7% 0.10% 0.06% Fixed Income $6,408 0.2% $115,616 3.1% 0.05% MM $6,601 0.3% $116,385 4.9% Equities $1,230 0.1% ($16,542) (0.8%) 0.00% Equities (ETFs) $1,358 0.2% $25,707 4.2% Govt Global EM debt IG HY Equities Commodities $3,706 1.3% $11,843 4.2% Global EM debt $1,408 0.2% $30,304 4.3% Source: EPFR Global BofA GLOBAL RESEARCH Source: EPFR Global. In $mn; week ending 12th August. Data refers to European domiciled funds, Government bond funds registered their seventh consecutive week of inflows. Money except for EM debt funds that refer to global. Some market funds also registered strong inflows. Global EM debt funds registered inflows, IG funds can also allocate to government bonds. Note that IG funds are also split into other currencies away their strongest over the past seven weeks. from Euro, USD and GBP. BofA GLOBAL RESEARCH Overall, fixed income funds registered inflows, now 19 weeks in a row. Equity funds registered inflows last week, driven primarily by another week of strong inflows into ETFs.

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Flow chartbook Weekly Flow Distributions per asset class Exhibit 2: Distribution of IG fund flows ($mn) over the past week Exhibit 3: Distribution of HY fund flows ($mn) over the past week The flow trend is dispersed across funds The flow trend is dispersed across funds

-500 > x -50 < x < 0 -500 < x < -250 -250 < x < -100 -100 < x < -50 x > 500 50 < x < 100 100 < x < 250 250 < x < 500 0 < x < 50 -100 > x -10 < x < 0 -100 < x < -50 -50 < x < -25 -25 < x < -10 x > 100 0 < x < 10 10 < x < 25 25 < x < 50 50 < x < 100

Source: EPFR Global. The height of each column represents the number of funds with weekly flow Source: EPFR Global. The height of each column represents the number of funds with weekly flow within a given bucket within a given bucket BofA GLOBAL RESEARCH…