Investor Caution Triggers Outflows from Global Equity Funds

For the first time in five weeks, global equity funds witnessed significant outflows as rising U.S. Treasury yields and investor caution ahead of a key U.S. inflation report took a toll on the market. Lipper data revealed that global equity funds experienced a withdrawal of $4.9 billion for the week ending May 29, marking their first outflow since April 24.

U.S. equity funds bore the brunt with outflows totalling $7.6 billion, while Asian equity funds recorded their second consecutive weekly outflow with $1.5 billion in withdrawals. In contrast, European equity funds managed to attract $3.7 billion in inflows.

U.S. Treasury yields have climbed higher following an unexpected boost in consumer confidence in May and improved perceptions of the job market.

The MSCI All Country Stock Index (.MIWD00000PUS), opens new tab, fell nearly 2% for the week as investors remained cautious ahead of the U.S. core Personal Consumption Expenditures Price Index report for April, expected on Friday.

Sector-specific fund movements were varied: financials, health care, and consumer discretionary funds faced outflows of $598 million, $570 million, and $452 million respectively. On the other hand, tech and industrial sector funds saw inflows of $379 million and $289 million respectively.

This week saw global bond funds receiving $4.3 billion in inflows, which is less than the previous week’s $12.4 billion. Global government bond funds, high-yield bond funds, and loan participation funds recorded inflows of $877 million, $337 million, and $394 million respectively. Money market funds experienced significant outflows of $5.7 billion, compared to a substantial inflow of $17.1 billion the previous week.

In the commodities sector, precious metals funds faced their first outflows in three months amounting to $580.4 million, while energy funds encountered net sales of approximately $80 million.

Emerging market data covering 29,558 funds showed a net sale of equities worth $538.1 million, marking the largest outflow in over a month. Bond funds reported their first outflow in three weeks at $952 million.

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