Global Equity Funds Witness Second Weekly Outflow on Trade Concerns, But Rebound in Sight
Amidst geopolitical uncertainties and concerns over US tariffs, global equity funds experienced a second consecutive weekly outflow by February 5. Investors exercised caution following US President Donald Trump's announcement of tariffs on Mexico, Canada, and China.
However, the selling pressure dissipated after Trump temporarily suspended the tariffs on Canada and Mexico. Data from LSEG Lipper indicates that investors withdrew $3.86 billion from global equity funds during the week, reversing the $15.35 billion worth of purchases the previous week.
US equity funds witnessed outflows of $10.71 billion, while Asian and European funds received allocations of $4.86 billion and $1.88 billion, respectively. Global equity sectoral funds, on the other hand, attracted $2.9 billion in net inflows, marking their fifth consecutive week of net purchases. Financial and consumer discretionary sectors led the inflows, receiving $2 billion and $911 million, respectively.
Global bond funds maintained their popularity for the sixth consecutive week, attracting $17.74 billion in net inflows. Short-term bond funds remained in high demand for the 18th consecutive week, with $4.14 billion in inflows. Loan participation funds and high yield bond funds also drew significant inflows of $3.03 billion and $1.62 billion, respectively.
After a week of net sales amounting to $40.64 billion, investors returned to money market funds, purchasing $75.4 billion. Among commodity funds, precious metals funds experienced net outflows of $563 million, marking their third consecutive week of declines. Energy funds, on the contrary, gained $100 million in inflows.
Data for 29,598 emerging market funds showed that investors divested equity funds for the 13th consecutive week, with outflows totaling $600 million. However, they invested a net $1.85 billion in bond funds, extending their streak of net purchases to five consecutive weeks.