Daily Management Review

Concerns About Rate Hikes Cause Outflows From Global Equity Funds


Concerns About Rate Hikes Cause Outflows From Global Equity Funds
A stronger-than-expected US jobs report sparked worries that the Federal Reserve would keep policy rates higher for longer than expected, leading to the first weekly outflow in five weeks for global equity funds.
In the week leading up to February 8, according to Refinitiv Lipper data, investors withdrew roughly $209 million from global equity funds, which was their first weekly net selling since January 4.
Due to investors pricing in the possibility of additional Fed rate hikes following the stellar January U.S. payrolls report, the dollar index increased by about 1.1% last week.
Despite investor purchases of about $100 million each in European and Asian funds, US equity funds experienced outflows of $470 million.
The data show that the financial sector saw inflows of about $952 million while the healthcare, consumer staples, and energy sectors experienced outflows of a net $1.23 billion, $501 million, and $306 million, respectively.
Investors continued to be net buyers of bond funds for a sixth week, but the volume of purchases fell to $4.52 billion, the lowest level since December 28.
For a third week in a row, investors continued to flock to global short- and medium-term bond funds, which received a net $2.38 billion. Nevertheless, investors sold $2.27 billion worth of government bond funds, which was the highest net weekly selling since at least March 2021.
Global money market funds saw outflows of $4.47 billion as opposed to net purchases of $1.12 billion the week before.
Energy funds saw net inflows of $447 million from investors for the second week in a row, while precious metals funds saw a net inflow of $100 million following a weekly outflow.
According to data for 24,697 EM funds, equity funds received a net $2.74 billion in purchases for the fifth week in a row, while bond funds received a net $1.3 billion.