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Nearly $14 billion sell-off creates biggest global equity fund outflow in 5 weeks

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Global equity funds see biggest weekly outflow in five weeks

Global equity funds registered their biggest weekly outflow in five weeks to July 20 on investor caution ahead of crucial central bank meetings in which rate hikes may be announced.

According to Refinitiv Lipper, investors sold a global equity fund for a net $13.79 billion, the biggest weekly outflow since June 15.

Graphic: Fund Flows – Global Equity Bond and Money Markets

The European Central Bank raised its benchmark deposit rate by 50 basis points, well above its own guidance of a 25-basis-point increase, to rein in rising inflation levels in the region.

The US Federal Reserve is expected to raise policy rates by a further 75 basis points at its meeting next week as it tries to balance the risks of extremely high inflation and the prospect of a recession.

US and European equity funds booked withdrawals of $8.45 billion and $5.6 billion, respectively, although investors put in about $740 million in Asian equity funds.

Regional data shows that financial, consumer discretionary and metals and mining funds saw outflows of $995 million, $445 million and $416 million, respectively, but healthcare saw inflows of $511 million.

Graphic: Fund Flows – Global Equity Sectors

Selling in global bond funds continued for a second week as investors opened up $6.9 billion in holdings.

Government funds saw an outflow of $2.49 billion after a 15-week inflow, while net sales in short- and medium-term bond funds fell to a 15-week low of $1.88 billion.

Graphic: Global Bond Fund inflows for the week ending July 20

Meanwhile, investors sold $1.34 billion worth of money market funds after two weeks of buying.

In the commodities space, gold and precious metals funds posted net sales of $1.1 billion, up 63% from the previous week, while energy funds posted their fourth weekly outflow, valued at $180 million.

An analysis of 24,388 emerging market funds showed investors abandoned equity funds of $2.04 billion, the biggest outflow in 10 weeks, while bond funds suffered their sixth weekly outflow of $2.13 billion.

Graphic: Fund Flow – EM Equity & Bonds

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