Deutsche Bank Sees Strong U.S. Stock Inflows

Key Moments

Global equity funds attracted $62.2 billion in inflows, including $47.1 billion into U.S. equities, reaching a two-month high.
Deutsche Bank said aggregate equity positioning “slumped further into underweight,” hitting the lowest level since June 2025.
Credit funds saw $13 billion in outflows, the largest weekly decline in nearly a year, with both investment-grade and high-yield segments posting redemptions.

Equity Flows Surge, Led by U.S. Markets

U.S. equity funds experienced a significant acceleration in inflows last week, according to a note from Deutsche Bank, delivering one of the strongest weekly flow readings on record.

The bank reported that total inflows into equity funds climbed to a two-month peak of $62.2 billion. Of this amount, $47.1 billion went into U.S. equity funds, supported, Deutsche Bank said, by typically favorable seasonal dynamics in March and by larger tax refunds this year.

Investor Positioning Turns More Defensive

Despite the robust inflow data, Deutsche Bank indicated that overall equity positioning continued to deteriorate. The bank said aggregate equity exposure “slumped further into underweight,” reaching its weakest level since June 2025.

Positioning among systematic strategies also eased. Deutsche Bank noted that positioning for systematic strategies reverted to neutral, with commodity trading advisors further trimming their net long equity exposure.

Market Reaction to Geopolitical Tensions

U.S. equities sold off on Friday in a volatile trading session, as investors reacted to sustained tensions in the U.S.-Israel conflict with Iran and a continued rise in oil prices.

The major U.S. equity benchmarks ended lower:

Index	Move	Closing Level
S&P 500	-1.51%	6,506.48
Nasdaq Composite	-2.01%	21,647.61
Russell 2000	Fell more than 2%	Entered correction after 10% drop from recent high

The pullback followed an escalation in the Middle East, where Iran and Israel exchanged strikes overnight and Tehran launched additional attacks on energy infrastructure across the Persian Gulf.

The Wall Street Journal reported, citing U.S. officials, that the Pentagon is sending thousands more Marines to the region as the United States increases its military footprint amid the mounting conflict.

Credit Funds Suffer Largest Weekly Outflows in Months

While equities drew strong inflows, fixed income markets moved in the opposite direction. Deutsche Bank said credit funds recorded $13 billion in outflows last week, marking the sharpest weekly decline in nearly a year.

According to the bank, investment-grade credit funds saw redemptions of $4.1 billion, while high-yield funds registered $5.5 billion in outflows. This represented another consecutive week of withdrawals across both market segments.

Sector and Style Positioning Remains Cautious

Deutsche Bank highlighted notably cautious positioning across several equity sectors. The bank said Technology allocations are “quite underweight,” and that Software exposure sits close to the bottom decile of its historical range.

Outside the Energy sector, positioning across key cyclical areas also remained subdued. The bank pointed out that allocations to Consumer cyclicals, Materials, and Financials are near levels last seen after U.S. tariff announcements in April 2025.