Global equity funds attract big inflows as rate cut bets rise

Demand for global equity funds rose sharply in the seven days to May 8, driven by renewed bets on Federal Reserve interest rate cuts after a softer-than-anticipated US employment report.

Investors bought a net USD 12.72 billion worth of global equity funds during the week, the largest weekly net purchase since March 20, data from LSEG showed.

Last week, Labor Department data showed US job growth slowed more than expected in April, easing worries that the persistent inflation in the first quarter would push the Federal Reserve to hold interest rates for longer.

European equity funds led the way, attracting about USD 6.21 billion in a second successive week of net buying. Asian and US equity funds recorded net purchases of USD 4.71 billion and USD 1.14 billion, respectively.

However, sectoral equity funds recorded net outflows for a sixth successive week, worth about USD 519 million. Investors sold healthcare, tech, and gold & precious metals funds for a net of USD 390 million, USD 340 million, and USD 308 million, respectively.

Consumer staples bucked the trend with about USD 507 million worth of net purchases.

Debt funds were also in demand with investors pumping a net USD 12.6 billion into global bond funds, the most in a week since April 10.

Global high-yield bond funds attracted a net USD 3.41 billion, the largest amount since Jan. 31. Loan participation and government bond funds saw net purchases of about USD 2 billion and USD 1.46 billion, respectively.

Money market funds secured about USD 54.96 billion worth of net inflows, the most for a week since March 6.

Among commodities, investors ditched USD 493 million worth of precious metal funds, the largest net weekly withdrawal since April 17. Energy funds lost a net of USD 93 million.

Data covering 29,503 emerging market funds showed investors remained net sellers for a fourth straight week, with a net USD 1.51 billion flowing out.

Emerging equity funds attracted USD 1.17 billion, however, the first weekly net purchase since March 27.

(Reporting by Gaurav Dogra in Bengaluru; Editing by Kirsten Donovan)