Global equity funds see large outflows on slowdown worries

Aug 26 (Reuters) – Global equity funds witnessed their biggest weekly capital withdrawals in five weeks in the week to Aug. 24 on concerns that rate hikes would lead to a recession.

Investors were also wary ahead of the Federal Reserve’s annual Jackson Hole symposium, which could offer insights into the central bank’s future policy path.

According to Refinitiv Lipper, investors disposed of a net USD 10.48 billion worth of global equity funds in the week, which compares with just USD 3.15 billion worth of purchases in the previous week.

Fed Chair Jerome Powell is due to deliver his keynote speech to the symposium on Friday, and investors are likely to scrutinize the comments for any indication on how steep future interest rate hikes would be.

All major regions witnessed equity fund outflows with investors exiting a net USD 5.17 billion, USD 2.19 billion and USD 2.11 billion from Europe, the United States and Asia, respectively.

Among sector funds, tech, industrials and consumer discretionary faced outflows of USD 2.04 billion, USD 735 million and USD 595 million, respectively. Financials sector funds obtained USD 1.85 billion, while utilities received USD 588 million.

Bond funds also recorded withdrawals, amounting to USD 8.41 billion, the biggest for a week since June 29.

Investors sold high yield funds of USD 5.98 billion, marking their biggest weekly net selling since June 15, while government and short- & medium-term funds saw outflows of USD 894 million and USD 153 million, respectively.

Meanwhile, weekly net selling in money market funds eased to a three-week low of USD 375 million.

Commodities funds’ data showed precious metal funds suffered outflows of USD 354 million in a ninth straight week of net selling, while energy funds had a second weekly outgo, although a marginal USD 5 million.

An analysis of 24,457 emerging market funds showed investors sold equity funds of USD 1.34 billion, posting the biggest outflow in five weeks, while also exiting bond funds to the tune of USD 1.05 billion, after three weeks of buying in a row.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kim Coghill)