Over the past three months, the net inflow into US stock ETFs has exceeded $400 billion. The source of this money is quite interesting—401k accounts, pension funds, advisory models, target date fund rebalancing—all of these are large institutional funds.

Their operating logic is straightforward: they don't worry about whether prices are high or low; as long as they believe a trend is happening, they act. How do they judge? They believe in a soft landing for the economy, the arrival of a rate-cutting cycle, the continuation of AI productivity stories, short-term bond funds moving into long-term assets, and overseas hot money chasing dollar assets—once these expectations are confirmed, it's time to act.

While $400 billion sounds like it’s flowing into US stock ETFs, the actual flow isn't so evenly distributed. The assets with the largest weights benefit the most, especially large-cap stocks and technology sectors. In other words, the movement of institutional funds already reveals market expectations.

An interesting contrast is that many retail investors are still debating whether we are in a bear market, but over $400 billion of institutional funds are quietly bottom-fishing. They are betting that by 2026, these trends will become clearer and returns will be more significant. This difference in confidence itself indicates some underlying issues.