Emerging Markets Funds Face Decline Amid Shift to US-Centric AI Boom

Global AI Investment Boom Concentrates in the United States

The global artificial intelligence investment boom is rapidly becoming concentrated in the United States, with emerging markets and commodity-linked trades showing clear signs of investor fatigue, according to Elara Securities' Global Liquidity Tracker. For the first time in eight weeks, global equity funds recorded net outflows, with investors withdrawing nearly $7 billion amid sizeable redemptions from China, Japan, and Europe.

While broad global allocations are slowing, US-focused technology, semiconductor, and industrial funds continue to attract strong inflows, reinforcing the growing dominance of American markets in the AI trade. The report notes that the once broad-based AI rally that began in mid-2025 is increasingly evolving into a US-centric theme. Emerging markets remain under sustained pressure, with China continuing to witness domestic selling and India facing persistent foreign outflows.

India alone saw redemptions of $463 million over the past seven weeks. Global Emerging Market (GEM) funds recorded their fourth consecutive week of outflows, the first such streak since March 2025, taking cumulative redemptions to $4.2 billion and signalling a significant slowdown in investor appetite for emerging market risk.

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Some of the earliest leaders of the AI-driven rally are now beginning to lose momentum. South Korea's 10-week rolling foreign flows turned negative for the first time since June 2025, while Taiwan and Brazil are witnessing their weakest flow trends since the beginning of the AI boom. The report describes these as early warning signs, suggesting that markets which led global performance over the past year are no longer attracting the same intensity of capital inflows.

The cooling trend is also visible across commodity-linked investments. Precious metal funds saw another $1.1 billion in outflows this week. Silver was the first major commodity to lose momentum in January 2026, followed by gold beginning in March. Commodity equity funds have now suffered cumulative redemptions of $9.6 billion since March, while energy equity funds recorded $1.4 billion in outflows over the past seven weeks, their second-largest redemption cycle since April 2025.