Global equity funds draw massive inflows as rate worries ease

Nov 10 – Global equity funds saw a significant uptick in demand in the week through Nov. 8 as investor sentiment improved following the decision of major central banks to keep policy rates unchanged.

A shift in rate hike expectations and a report from the US Labor Department indicating a slowdown in job growth in October further eased treasury yields, loosening financial conditions.

Investors poured a net USD 5.63 billion into global equity funds during the week, registering their biggest weekly net purchase since Sept. 13.

European, and US equity funds had purchases of USD 2.92 billion and USD 1.9 billion respectively. Asia drew just USD 708 million, the smallest amount since Aug. 16.

The technology sector stood out, securing USD 1.3 billion in inflows, its highest since early July. Financials also saw positive movements with USD 354 million in inflows, but consumer staples experienced outflows of about USD 571 million.

Money market funds continued to attract investors for the third consecutive week, with net inflows of about USD 53.75 billion.

Global bond funds broke a three-week streak of outflows, registering USD 6.73 billion in net purchases.

Reflecting improved risk appetite, high-yield bond funds saw substantial inflows of around USD 6.43 billion, the biggest weekly gain since mid-June 2020.

Government bond funds also experienced net purchases of about USD 2.76 billion. In contrast, global short-term bond funds faced approximately USD 4.44 billion in outflows.

In the commodities sector, precious metal funds continued to attract interest, garnering USD 73 million in net purchases for a second consecutive week. Energy funds also maintained their appeal with USD 54 million in inflows, marking three weeks of consecutive gains.

Emerging market data, encompassing 29,633 funds, indicated a net sell-off of USD 1.73 billion in EM equity funds, extending a 13-week withdrawal streak. In contrast, EM bond funds received USD 592 million – their first weekly inflow in 15 weeks.

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