mutual funds

Investment flows into global equity funds jump


Investors continued to buy equity funds in the week ended June 16, driven by rising hopes of a faster global economic recovery and shrugging off upside inflation risks. According to Refinitiv Lipper data, global equity funds received $10.3 billion worth of inflows, the biggest in three weeks.

World stocks hit fresh peaks earlier this week on investor bets that higher inflation levels are transitory and on optimism about the improving global economic outlook.

However, the MSCI world equity index has dropped since Wednesday (June 16), as U.S. Federal Reserve policy makers now see possibly two rate hikes by the end of 2023, up from none as of their last projections in March. They’re also more concerned about inflation than they seemed to be.

A highly anticipated report released by the U.S. Labor Department last Thursday showed consumer prices in the world’s largest economy increased by more than expected in the month of May. The consumer price index rose by 0.6 percent in May while economists had expected consumer prices to increase by 0.4 percent.

European equity funds led inflows, having purchases worth $8.6 billion. Asian equity funds attracted $1.2 billion while U.S. equity funds had net purchases worth $0.4 billion.

mutual funds flows
(Source: Refinitiv Lipper data Graphics: Reuters/ Gaurav Dogra- Patturaja Murugaboothy)

Global bond funds received an inflow of $9 billion in the week ended June 16, although the inflows were the smallest in three weeks.

Global high-yield bonds saw net selling of $1.43 billion, the biggest in four weeks.

Inflation-linked bonds continued to attract money flows for the seventh successive week.

On the other hand, investors sold $56.6 billion in global money market funds, the highest since December 2020, pointing to a rise in risk appetites.

Among commodities, precious metal funds had some meagre inflows, while energy funds continued to witness outflows for the third consecutive week.

An analysis of 23,712 emerging-market funds showed bond funds received $1.27 billion in inflows, after marginal outflows in the previous week, while equity funds had inflows worth $184 million, the third straight week of inflows.

With reporting by Reuters