Inflows into global equity funds slowed in the week ending November 20, as geopolitical tensions between Russia and the West, along with uncertainty over the U.S. interest rate policy outlook for next year, weighed on investor sentiment.
LSEG data revealed that investors poured a net $7.97 billion into global equity funds during the week, a sharp drop from the $49.84 billion recorded in net purchases the previous week.
Diminished expectations for accelerated interest rate cuts dampened inflows, following comments from Fed Chair Jerome Powell. Powell highlighted continued U.S. economic growth, a strong labor market, and inflation remaining above the 2% target, suggesting no immediate need for the Federal Reserve to lower rates.
Investors allocated $4.17 billion and $2.98 billion in net inflows to European and U.S. equity funds, respectively. However, these figures marked significant declines from the previous week’s net inflows of $11.8 billion and $37.42 billion. Meanwhile, Asian equity funds saw net sales of $744 million, marking a second consecutive week of outflows.
Among sectors, financials and industrials attracted notable inflows of $1.53 billion and $571 million, respectively, while the utilities sector faced net outflows of $550 million.
Global bond funds extended their streak of weekly inflows to 48 weeks, with a total of $9.61 billion in net investments. Loan participation funds saw a sharp inflow of $2.03 billion, the highest in 2.5 years, while high-yield bond funds attracted $2.12 billion. Conversely, government bond funds experienced outflows of $2.13 billion.
Additionally, money market funds witnessed outflows of $9.31 billion, reversing the trend of aggressive inflows over the preceding two weeks.
Gold and precious metals funds drew net investments of $966 million, marking their thirteenth weekly inflow in the past fifteen weeks.
Data from 29,675 emerging market funds revealed that investors pulled out $5.49 billion from equity funds, following net disposals of $5.78 billion in the previous week. Bond funds in emerging markets also recorded outflows of $1.61 billion.
