Follow The Flow The streak is over

Follow The Flow The streak is over

First fixed income outflows in 24 weeks 18 September 2026

Fixed income funds recorded their first outflow after 23 consecutive weeks of inflows. Credit Strategy Sentiment in credit markets is facing increasing headwinds, with both IG and HY funds Europe experiencing outflows over the past week for the second consecutive week. Significant Ioannis Angelakis moves in rates markets, elevated rates volatility, and stretched valuations across risk Credit Derivatives Strategist MLI (UK) assets are prompting investors to reduce risk exposure. As "risk-free" yields continue to rise, the incentive to take credit risk to generate Barnaby Martin additional yield diminishes. We expect pressure on credit markets to persist until rates Credit Strategist MLI (UK) volatility subsides and government bond yields stabilise. Rates vol above the 75-80pts level has been associated with outflows over the past two years. Mohit Agarwalla Exhibit 1: Elevated uncertainty in rates is having a notable impact on flows into credit funds Credit Strategist MLI (UK) The higher the level of rates vol, the weaker the flow into credit funds

Table 1:Weekly and YTD European 2 70 retail flows 0 Weekly fund flows data across assets This Wk YTD (6) Sector Week (%) YTD (%) 110 HY ($717) (0.2%) $161 0.0% Flows into IG funds ($bn) Rates vol (rev'ed, RHS) (8) 120 HY (ETFs) ($266) (0.6%) $3,027 6.6% Jan-25 Mar-25 May-25 Jul-25 Oct-25 Dec-25 Feb-26 May-26 Jul-26 IG ($2,712) (0.1%) $39,659 1.8% in euros ($2,432) (0.2%) $13,417 1.2% Source: EPFR Global. in sterling ($485) (0.2%) $213 0.0% BofA GLOBAL RESEARCH in usd $63 0.0% $12,331 3.5%

Over the past week… IG (ETFs) Loan $544 $112 0.2% 0.6% $18,722 $3,424 7.4% 19.5% Overall, high-grade funds extended their outflows streak to two weeks. Across Govies $2,284 0.3% $55,219 6.5% maturities, short-term IG funds have recorded inflows over the previous week. However Fixed Income ($933) (0.0%) $124,833 3.3% mid- and long-term funds have suffered from outflows. MM ($14,946) (0.6%) $129,932 5.4% Equities ($632) (0.0%) ($15,894) (0.8%) High yield funds suffered from a second consecutive outflow this week. For European- Equities (ETFs) $1,328 0.2% $31,881 5.1%

domiciled funds, all sub-categories suffered from outflows last week, led by Euro- Commodities $825 0.3% $19,467 6.7% Global EM debt $3,024 0.4% $44,586 6.2% focussed HY funds. Similarly, HY ETFs saw outflows over the past week marking two Source: EPFR Global. In $mn; week ending 16th consecutive weeks of outflows. September. Data refers to European domiciled funds, except for EM debt funds that refer to global. Some Government bond funds logged a second consecutive week of inflows. Money IG funds can also allocate to government bonds. Note market funds flipped back into outflows, almost fully reversing last week's inflow. that IG funds are also split into other currencies away Global EM debt funds remained on track, as inflows continued for a seventh from Euro, USD and GBP. BofA GLOBAL RESEARCH consecutive week. Overall, flows for fixed income funds reversed course last week, turning to an outflow. Equity funds have also returned to outflows territory, while equity ETFs posted inflows for a seventh straight week.

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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…