Fixed income strategies continued to dominate Asian fund flows in early 2025, attracting US$13.29 billion in net inflows between January and May, according to a new report. 

The strong momentum reflects a clear investor preference for stability and yield in a persistently uncertain market environment.

However, April saw a noticeable slowdown, with inflows dipping to US$1.22 billion – the lowest monthly total this year. The pullback highlights investor concerns around the economic implications of US President Donald Trump’s shifting trade policies and confrontational stance towards the Federal Reserve. At the same time, a weakening US dollar further eroded confidence in dollar-denominated assets, particularly debt instruments that comprise the bulk of the global fixed income market, global funds network Calastone says in the report.

Nonetheless, sentiment rebounded quickly. In May, fixed income funds saw inflows of US$3.39 billion – matching January’s strong performance – as bond yields stabilized and investors regained confidence. This recovery was likely supported by easing trade tensions, clearer signals around Fed independence, and a growing sense that calls for a “Sell America” movement may have been overstated, the London-based firm says. 

April was the cruellest month for all asset classes, with net inflows declining more than 97% to just US$140 million, from the January-March monthly average of US$5.56 billion.

Despite the disruption, net fund flows across all asset classes for the first five months of 2025 were strong, reaching US$20.63 billion – surpassing the US$18.06 billion recorded over the same period last year. The robust momentum was seen in January ( US$6.65 billion ), February ( US$5.97 billion ), and March ( US$4.07 billion ).

“The turbulence in April was a direct response to the sudden escalation in US trade tensions,” says Justin Christopher, head of Asia at Calastone, “Faced with unpredictable policy signals and heightened market volatility, it was only rational for investors to pause and reassess. Yet the swift rebound in May across all asset classes highlights the resilience of Asia’s fund market and the agility of investors to adapt to rapidly shifting conditions.”

Equity funds, meanwhile, suffered net outflows of US$680 million in April and US$140 million in May – a sharp reversal from the average monthly inflow of US$770 million in the first quarter.

Mixed-asset funds were strong performers in Q1, attracting net inflows of US$2.03 billion – more than triple the US$610 million recorded during the same period in 2024. The surge reflected continued demand for balanced strategies offering both growth potential and capital preservation.

However, April and May marked a sharp departure from this trend, with outflows of US$410 million and US$140 million, respectively. This reversal suggests a strategic reallocation by investors in favour of relatively safer, single-asset exposures like fixed income, which continue to offer attractive and more predictable returns amid ongoing volatility.

Calastone says its report is based on real-time fund subscription and redemption data across its network of Asia-based fund distributors, providing timely and granular insights into investment activity in the region.