June 23 (Reuters) – Global equity funds suffered substantial outflows during the seven days to June 21 amid concerns over borrowing costs staying higher for longer as the European Central Bank raised interest rates and the Federal Reserve signaled more hikes.
Investors withdrew a net USD 15.12 billion from global equity funds which had seen net inflows of USD 16.04 billion a week earlier.
Fed Chair Jerome Powell struck a hawkish tone in his testimony before the US House Financial Services Committee on Wednesday, noting that a majority of policymakers expected two more quarter-point rate hikes by year-end.
The Bank of England surprised investors by raising interest rates by half a percentage point on Thursday, saying it would take more time for inflationary pressures to subside.
The US and European equity funds witnessed outflows of USD 16.47 billion and USD 1.81 billion, respectively, while investors pumped about USD 2.6 billion into Asian funds.
Healthcare and industrial sectors saw USD 1.14 billion and USD 174 million worth of net selling, respectively. Financials attracted about USD 710 million worth of inflows.
Meanwhile, global bond funds extended their inflows streak to a 14th straight week, with about USD 4.07 billion flowing in.
Global government and corporate bond funds attracted about USD 1.9 billion each. Meanwhile, high yield, loan participation, and convertible funds suffered outflows of about USD 400 million each.
Meanwhile, investors withdrew a net USD 15.13 billion from money market funds, their second straight week of outflows.
Among commodity funds, investors withdrew USD 498 million from precious metal funds, their fourth successive week of net selling. Energy funds also saw USD 176 million in outflows.
Data for 24,028 emerging market funds showed that investors secured a net USD 714 million worth of bond funds in their third straight week of net buying. They also purchased USD 812 million of equity funds.
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Vinay Dwivedi)