Global equity funds draw robust inflows on rate cut hopes

Dec 29 – Global equity funds attracted substantial inflows in the week through Dec. 27 as data showed US inflation cooled further in November, cementing expectations that the Federal Reserve would cut interest rates in March next year.

The MSCI All-World index surged to 3184.32 on Thursday, its highest since January 13, 2022 amid market optimism over the prospects of rate cuts.

According to LSEG data, global equity funds received a net USD 16.01 billion during the week, logging their most significant weekly net purchase since March 22.

Investors poured about USD 14.57 billion into US equity funds, the biggest amount since June 14. European and Asian funds, however, faced outflows of roughly USD 1 billion and USD 182 million, respectively.

Global bond funds, meanwhile, received USD 1.07 billion in inflows after two successive weeks of outflows.

Investors purchased USD 2.62 billion worth of global corporate bond funds in contrast to disposals of about USD 3.9 billion in the prior week. High yield funds also secured inflows, worth about USD 679 million but government bond funds had outflows of USD 265 million.

Meanwhile, global money market funds attracted USD 9.12 billion, their first weekly inflow in three weeks.

Among the commodities segment, precious metal funds attracted about USD 111 million as inflows extended into a fourth successive week. Energy funds also attracted about USD 36 million in net buying.

Data covering 29,066 emerging markets funds showed equity funds secured USD 1.94 billion worth of inflows, breaking a 19-week-long selling streak. EM bond funds, however, had USD 1.33 billion worth of outflows.

(Reporting by Gaurav Dogra in Bengaluru; Editing by Chizu Nomiyama)