Risk-on risk-off shocks have pronounced distributional impacts on capital flows, with managed funds playing an increasingly pivotal role in amplifying these effects. This paper demonstrates that among managed funds, passive funds, with their limited discretion and benchmarking mandates, significantly heighten susceptibility to extreme outflow realizations compared to active funds. These tail realizations create abnormal co-movements in emerging market flows and returns, resulting in outsized aggregate outcomes. This study highlights the distinct dynamics of passive fund flows in the face of changes in global investor risk bearing capacity and provides new insights into the changing mechanisms driving emerging market tail risks.