Global Equity Funds Extend Inflows as Investors Bet on Rate Cuts and AI Spending
Global equity funds continued their upward momentum in the week ending January 22nd, marking the fourth weekly inflow in five. This surge was fueled by optimism surrounding the potential for interest rate cuts by the U.S. Federal Reserve and President Donald Trump's plans for substantial investment in AI infrastructure.
According to data from LSEG Lipper, net inflows into global equity funds totaled $7.42 billion during the week, following $4.3 billion in outflows the previous week. The MSCI World index has climbed nearly 5% since the release of inflation data on January 15th, while Europe's STOXX 600 index hit a record high of 530.55 on Wednesday.
Regionally, European equity funds led the inflows with a staggering $6.69 billion. Asian funds also attracted $2.84 billion in net inflows, while U.S. funds lost $3.2 billion.
Sectoral funds were in high demand, garnering a net inflow of $4.86 billion, the largest since November 13, 2024. Tech, financials, and industrial sectors attracted substantial inflows of $1.86 billion, $1.38 billion, and $1.33 billion, respectively.
Global bond funds saw a net inflow of $14.27 billion, marking their fourth consecutive week of net purchases. High-yield segments were particularly sought after, attracting $2.72 billion in inflows, the largest amount in ten weeks. Loan participation funds and government bond funds also recorded significant inflows of $2.13 billion and $1.95 billion, respectively.
In contrast to the inflows in other asset classes, money market funds received a net $44.13 billion, a notable increase from the previous week's $94.14 billion in net sales.
Among commodities, investors withdrew $540 million from precious metal funds, marking their third weekly outflow in four. Energy funds also faced a net $456 million in sales, extending their outflow streak to seven consecutive weeks.
In emerging markets, equity funds experienced their 11th consecutive weekly outflow of $1.95 billion. However, bond funds received inflows for the third straight week, totaling $517 million on a net basis.