Global equity funds experience notable outflows amid U.S. yield worries

by | Oct 27, 2023 | Business

(Reuters) – Global equity funds suffered significant outflows in the seven days to Oct. 25, hit by worries over higher U.S. bond yields and caution over the war in the Middle East.

Investors pulled out a net $7.46 billion from global equity funds during the week, extending outflows into a sixth straight week, data from LSEG showed.

The yield on U.S. 10-year Treasury bonds reached a 16-year high earlier this week, breaching the 5% mark, driven by expectations of robust U.S. growth and a growing fiscal deficit.

European equity funds logged about $7.39 billion worth of outflows during the week, the biggest amount since Sept. 28, 2022. Investors also divested $2.69 billion worth of U.S. equity funds but poured $2.53 billion in Asian funds.

Among sectors, health care, financials, and consumer discretionary sector funds faced outflows of $696 million, $649 million, and $405 million, respectively. In contrast, the tech and energy sectors received around $500 million each in inflows.

Meanwhile, safe-haven government bond funds received $5.02 billion, the biggest weekly inflow in seven months. Investors also accumulated $18.3 billion worth of money market funds after $108.7 billion worth of net selling a week ago.

Global bond funds registered a combined outflow of about $604 million on a net basis, the first weekly net selling in three weeks.

Investors withdrew a net $1.73 billion from high-yield bond funds, staying net sellers for a seventh successive week. Corporate bond funds, meanwhile, received $520 million, the second weekly inflow in a row.

Commodities data revealed that investors poured about $411 million into precious metal funds, snapping a 21-week-long selling streak. Energy funds also received inflows, roughly about $435 million.

Data covering 28,654 emerging market funds showed that investors exited EM equity funds of $2.55 billion, extending outflows into an 11th straight week. EM bond funds also remained out of favour for a 13th successive week with $875 million in net disposals.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Alison Williams)


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