Global equity funds draw big inflows as inflationary pressures ease

Sept 15 – Global equity funds attracted substantial inflows in the week ending Sept. 13, buoyed by hopes the Federal Reserve might halt its rate increases amidst easing inflationary concerns, potentially boosting risk assets.

According to LSEG data, investors channeled approximately USD 9.95 billion into global equity funds, marking the most substantial net weekly acquisition since June 14.

Breaking it down regionally, US and Asian equity funds had inflows of roughly USD 9.7 billion and USD 1.62 billion, respectively. However, European funds were hit with outflows, shedding USD 662 million.

By sector, consumer discretionary funds saw an influx of about USD 867 million, and tech sector funds garnered around USD 474 million. Other sector-focused funds remained out of favor.

Last month’s US consumer prices saw their steepest rise in 14 months due to escalating gasoline costs, yet the year-on-year core inflation increase was the smallest in almost two years, which could potentially provide some leeway for the Federal Reserve to keep interest rates unchanged at its upcoming Wednesday meeting.

Contrastingly, the allure of global money market funds appeared to wane. They registered a net intake of USD 10.65 billion, a sharp decline from the USD 60.5 billion in the preceding week.

Global bond funds recorded USD 531 million in outflows, a reversal from the inflows seen over the past three weeks. High-yield funds reported around USD 899 million in outflows, breaking their two-week buying streak. But both corporate and government bond funds observed inflows, netting USD 1.09 billion and USD 831 million, respectively.

Among commodities, precious metal funds continued their selling trend into a 16th week with USD 454 million in outflows. Energy funds also experienced a dip, registering USD 128 million in outflows, marking a shift from the previous two weeks of net purchases.

Data covering 28,218 emerging market funds highlighted a net exit of USD 1.95 billion from equity funds. Bond funds in these markets also faced headwinds, with a disposal of approximately USD 795 million, marking their seventh consecutive week of net selling.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Andrew Heavens)