Weekly Fund Distribution Notes – 14 October 2025
16th October 2025
Money isn’t standing still – it never does. AI keeps inflating equity dreams, private credit is showing its initial cracks, gold has stolen the spotlight, and ETFs move from record to record. Private bank CIOs adjust allocations, regulators taking a closer look as liquidity keeps flooding every open door. Momentum is still the name of the game – but this time, everyone knows how quickly it might turn.
Fund selectors keep US tech exposure high, even as warnings grow louder that the AI boom may be morphing into a bubble or the mother of all bubbles. Both the IMF and Bank of England cautioned last week that valuations now rhyme with the dotcom peak, some even say it’s Dotcom on steroids, yet the S&P 500 keeps defying gravity. Behind the rally sits a torrent of AI-driven capital. Institutional and retail investors alike have poured billions into funds linked to artificial intelligence, semiconductors and infrastructure, betting that generative AI’s productivity story is only just beginning. That wave is also washing through US large-cap equity ETFs, which attracted €5.8 billion in September, their biggest monthly haul since spring, according to the latest Morningstar data. Fund selectors, caught between conviction and caution, are still riding the wave — eyes wide open, fingers crossed.
The private credit boom, meanwhile, is starting to buckle under its own weight. After months of increasingly vocal warnings, regulators are also moving from watchful to wary. The Financial Conduct Authority (FCA) is probing the twin collapses of First Brands and Tricolor, two U.S. asset-based lenders that left UBS and Jefferies nursing over EUR 1.2 billion in losses. The Financial Times quoted FCA markets head Simon Walls as saying the failures could be “useful case studies” to map the tangle between banks and non-banks — leverage, concentration, and blurred boundaries. The Bank of England and the Financial Stability Board are following suit, collecting data and weighing tougher leverage and disclosure rules for private markets that have swelled past EUR 13 trillion globally.
In this context, S&P is highlighting the opacity and complexity hidden in insurers’ private credit books, more than EUR 530 billion locked in private placements, including EUR 218 billion in shadowy “private letter” ratings that are not publicly accessible. Meanwhile, the retail flood keeps rising. Goldman’s Marc Nachmann warned that investment committees are increasingly pushing through deals simply to deploy capital, as evergreen funds prioritise speed and optics over discipline. It’s the so-called democratisation of private markets, one that works only as long as the rhythm keeps playing. Even Aberdeen is pleading for a reset: real transparency, valuation standards, comparability, or retail investors will be the ones learning the hard way. Definitely a fascinating environment; however, it requires open eyes.
Away from the shadows of private credit, gold has entered a record-breaking momentum phase, fuelled by feverish ETF inflows and relentless central bank buying. Over EUR 26 billion poured into gold ETFs last quarter alone, pushing prices past EUR 4,000/oz and total holdings beyond 600 tonnes. With debt, currency fears and geopolitical stress rising, investors are treating gold as the only safe constant – the safe-haven trade in a world drowning in liquidity.
European ETFs just broke the EUR 3 trillion AUM mark after another month of strong inflows. Investors poured nearly EUR 50 billion in September, marking the 36th straight month of net inflows, according to ETFGI. Equities led the charge with EUR 33 billion of new money, while active ETFs continued their breakout year — pulling in EUR 5.8 billion for the month and EUR 27 billion year-to-date, more than double last year’s pace.
Last but not least, Citywire Selector’s Q3 Super Allocator Report reveals how CIOs are positioning for what’s next. Equity overweights have more than doubled to 52%, with the sharpest rotation into Emerging Markets (up from 35% to 48%) on the back of a weaker dollar, cheaper valuations, and expected rate cuts. US exposure edged higher (from 10% to 13%), while Europe slipped (from 35% to 30%) as managers took profits. In fixed income, government bonds are out of favour — overweights fell from 25% to 13% — while corporates, especially short and mid-duration, remain the preferred hunting ground for yield without duration risk. Always a fascinating read, see link section for the full story.
