US equity sector rotation is ongoing and attracting fresh flows. Net fund flows
to US equities remain negative and positioning models sit at the 40th
percentile, but rising retail and institutional sentiment is supportive for
large caps over the medium term. Rotation and liquidation continue between
AI-vulnerable names and AI-core stocks; the shift from semis into software has
slowed. Healthcare has emerged as the primary recipient of new demand—hedge fund
exposure to US healthcare has not meaningfully recovered while healthcare ETFs
show persistent inflows, leaving room for further improvement; European
healthcare is also favored into quarter-end as hedge fund sentiment turns
positive. Retailers are under pressure with hedge funds reinitiating shorts on
global brand names. Metals and mining have rallied over the past month but
positioning is not yet crowded. European banks have seen heavy hedge fund
selling. JPMorgan Aug. 21 report
