Global equity funds see surge in inflows on Fed pause hopes

Nov 17 – Global equity funds saw significant inflows in the week ending Nov. 15, buoyed by investor hopes that cooler-than-expected US inflation would prompt the Federal Reserve to pause interest rate hikes.

The MSCI World Equity Index hit a two-month peak of 686.32 this week, propelled by US data on Tuesday indicating that consumer prices in October remained steady, defying expectations of a 0.1% increase. The core Consumer Price Index (CPI), rising only 0.2%, also fell short of the anticipated 0.3% hike.

Investors pumped in a net USD 11.48 billion into global equity funds during the week, marking the biggest weekly net purchase since June 14, LSEG data showed.

US equity funds alone attracted USD 9.33 billion, a significant rise from the USD 1.84 billion in net purchases a week earlier. European and Asian equity funds also saw inflows, attracting USD 1.24 billion and USD 431 million, respectively.

The technology sector, in particular, witnessed a notable surge in interest, with a net USD 2.15 billion poured into the sector — the highest since Dec. 15, 2021.

Gold, precious metals, and communication services sectors attracted USD 534 million and USD 237 million, respectively.

Global bond funds continued to attract capital, with approximately USD 3.5 billion channeled into them, marking the second consecutive week of net buying. High-yield bond funds recorded net purchases of around USD 5.01 billion, building on the previous week’s USD 6.43 billion inflow.

However, government bond funds saw a drastic reduction in inflows, receiving only USD 140 million, a 95% decrease from the USD 2.77 billion net buying in the week prior.

In the commodities market, energy funds remained popular for the fourth week in a row, securing about USD 77 million in inflows. Precious metal funds experienced modest inflows of USD 53 million, the smallest in three weeks.

Emerging market (EM) data, encompassing 29,658 funds, highlighted a net sell-off of USD 1.3 billion in EM bond funds during the week, a stark contrast to the USD 745 million net purchases seen a week earlier. EM equity funds continued to face headwinds, with a net USD 554 million exiting in a 14th consecutive week of outflows.

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