Confidence among Asian investors wavered in April, as Trump’s sweeping tariffs sent shockwaves through global markets, freezing the region’s fast-growing fund inflows, according to the latest fund flow data from Calastone, the largest global funds network. Net inflows across all asset classes declined more than 97% from the January-March monthly average of US$5.56 billion, to just US$0.14 billion.
The announcement of the tariffs sparked a sharp sell-off across global equities, driving heightened volatility as investors scrambled to assess the evolving geopolitical landscape. Equity funds, which had seen a strong revival earlier in the year, were hit hardest – swinging from steady inflows in Q1 to net redemptions of US$0.68 billion in April and US$0.14 billion in May, as risk appetite quickly evaporated.
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).
Justin Christopher, Head of Asia at Calastone, remarked: “The turbulence in April was a direct response to the sudden escalation in US trade tensions. 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.”
Asian investors showed renewed interest in equity funds at the start of 2025, with net inflows of US$1.49 billion recorded by May – a notable reversal from the prolonged outflows that dominated in 2024. This shift reflected growing, albeit cautious, confidence underpinned by improving macroeconomic conditions and a gradual resurgence in risk appetite.
However, that optimism proved short-lived. In April, the implementation of sweeping US tariffs triggered a sharp market downturn, prompting investors to retreat. Equity funds suffered net outflows of US$0.68 billion in April and US$0.14 billion in May – a sharp reversal from the average monthly inflow of US$0.77 billion in Q1.
Initial investor enthusiasm around anticipated monetary easing from the US Federal Reserve also appears to have cooled, as the central bank reiterated its data-dependent stance. This added to the overall hesitancy, curbing risk-taking appetite as investors navigate the rest of 2025.
Fixed income strategies continued to dominate Asian fund flows in early 2025, attracting US$13.29 billion in net inflows between January and May. The strong momentum reflects a clear investor preference for stability and yield in a persistently uncertain market environment.
April saw a noticeable slowdown, with inflows dipping to US$1.22 billion – the lowest monthly total this year. The pullback likely reflected investor concerns around the economic implications of the Trump Administration’s shifting trade policies and its confrontational stance toward 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.
Nonetheless, sentiment rebounded quickly. In May, fixed income funds saw inflows of US$3.39 billion – matching January’s strong performance – as bond yields stabilised 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.
Mixed asset funds were strong performers in the first quarter of 2025, attracting net inflows of US$2.03 billion – more than triple the US$0.61 billion 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$0.41 billion and US$0.14 billion 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.
