Updated February 23rd, 2024 at 18:26 IST

Investor concerns drive global equity fund outflows amid inflation fears

The unexpected inflation data tempered expectations for an imminent Federal Reserve rate cut, prompting profit-taking in equity funds.

Reported by: Business Desk
Nikkei | Image:AP Photo
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Global equity funds witnessed outflows amid growing concerns over inflation, according to data from LSEG. Investors scaled back their holdings in global equity funds by a net $2.64 billion during the seven days leading up to February 21, following net purchases totalling $10.32 billion in the previous week.

The unexpected inflation data tempered expectations for an imminent Federal Reserve rate cut, prompting profit-taking in equity funds. Both US and European equity funds saw significant outflows, totalling $4.86 billion and $271 million, respectively. However, Asian funds bucked the trend, attracting approximately $2.02 billion in inflows.

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Despite the concerns, the MSCI World Stock Index reached a record high of 761.3 on Thursday, boosted by Nvidia's prediction of a substantial increase in first-quarter revenue, which ignited a rally in AI-related chip stocks worldwide.

Within sector funds, financials, healthcare, and metals and mining sectors experienced net selling, with outflows totalling $594 million, $574 million, and $420 million, respectively.

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Conversely, global bond funds continued to attract investors, recording net inflows of $9.72 billion, marking the ninth consecutive week of net buying. Global high-yield bond funds saw the largest inflow in three weeks, receiving $1.09 billion, while government bond funds and loan participation funds also saw inflows of $719 million and $225 million, respectively.

On the other hand, money market funds faced net outflows of $9.69 billion for the second consecutive week.

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In commodities, precious metal funds saw their eighth consecutive week of outflows, totalling $767 million, while energy funds experienced net buying of $42 million.

Emerging market funds saw mixed trends, with equity funds attracting $269 million in inflows for the third consecutive week, while bond funds recorded $1.1 billion in outflows for the second successive week, based on data covering 29,685 funds.

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(With Reuters inputs)
 

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Published February 23rd, 2024 at 18:26 IST