Global capital flows are showing a clear turn toward risk assets, with investors sharply increasing exposure to US equities and emerging markets in the latest week, according to the Global Liquidity Tracker published by Elara Securities. The data points to a coordinated reallocation away from cash, underscoring a meaningful change in portfolio positioning across geographies.

Over the past several months, global investors have navigated a complex environment shaped by sticky inflation, evolving interest-rate expectations, and uneven global growth. While equity markets particularly in the US have remained resilient, fund flows had until recently been more cautious, with significant allocations parked in money market funds as investors waited for clearer signals.

That stance appears to be changing. The latest data shows a decisive pickup in equity allocations, coinciding with reduced cash holdings. This suggests that investors are increasingly willing to take directional risk rather than merely chase yield or preserve capital.

US equity fund inflows surged to $79 billion in the latest week, marking the highest level in one year. The bulk of this capital flowed into large, passive vehicles, notably iShares and Vanguard exchange-traded funds tracking the S&P 500. Such concentration indicates that investors are expressing conviction at the index level rather than through selective stock-picking.

At the same time, money market funds recorded redemptions of $44 billion the largest outflow in eight months. This reversal from cash instruments reinforces the view that capital is being actively redeployed rather than newly created.

Elara Securities noted that inflow episodes of this magnitude into US equities have been rare, occurring only four times in the past six years. Historically, those episodes were followed either by market peaks or prolonged sideways consolidation, rather than immediate further rallies. This historical context tempers the near-term optimism implied by the headline numbers.

Emerging market (EM) funds extended their positive streak for a sixth consecutive week, with inflows rising to a three-month high of $3.2 billion. The recovery is notable not just for its duration, but for its breadth.

China led the inflows, attracting $10.3 billion its strongest weekly inflow in nine weeks suggesting renewed global interest after a prolonged period of skepticism. Brazil followed with $685 million, marking its best inflow in four weeks. Taiwan and South Korea continued to see steady allocations, reflecting confidence in North Asia’s technology and export-linked themes.

India also featured positively, with inflows improving to $650 million, an eight-month high. While the absolute number remains modest relative to some peers, the direction is important, especially after periods of intermittent outflows earlier in the year.

According to the report, global investors have been allocating to emerging markets in a highly correlated fashion over the past four months. Nearly 70% of EM countries are now experiencing positive flow momentum, with the breadth indicator trending higher since May 2025. This suggests that the EM rebound is not confined to one or two tactical trades, but is becoming more broad-based.

Beyond equities, commodity-linked funds also saw a notable pickup in allocations. Physical industrial commodity funds attracted $4 billion, while precious metal funds received $8.2 billion both at nine-week highs. Commodity equity funds recorded inflows of $1.8 billion, the strongest in ten weeks.

This pattern indicates renewed investor interest in real assets, potentially as a hedge against macro uncertainty or as a play on global growth stabilisation. The simultaneous inflows into equities and commodities suggest that investors are positioning for a scenario where growth holds up without an immediate resurgence of inflation shocks.

For global markets, the shift from cash to equities is a critical signal. Liquidity-driven rallies tend to be powerful but can also be fragile if sentiment reverses. The fact that US equity inflows are at a one-year high raises questions about how much incremental buying power remains in the near term.

From an Indian market perspective, improving EM flows are particularly relevant. India’s return to positive inflows at an eight-month high strengthens the case for relative resilience, especially if global investors continue to diversify beyond US-centric allocations. However, India will still compete for capital against China and other large EMs that are now also seeing renewed interest.