Global equity funds draw massive inflows as rate worries ease

(Reuters) – Global equity funds saw a significant uptick in demand in the week through Nov. 8 as investor sentiment improved following the decision of major central banks to keep policy rates unchanged.

A shift in rate hike expectations and a report from the U.S. Labor Department indicating a slowdown in job growth in October further eased treasury yields, loosening financial conditions.

Investors poured a net $5.63 billion into global equity funds during the week, registering their biggest weekly net purchase since Sept. 13.

European, and U.S. equity funds had purchases of $2.92 billion and $1.9 billion respectively. Asia drew just $708 million, the smallest amount since Aug. 16.

The technology sector stood out, securing $1.3 billion in inflows, its highest since early July. Financials also saw positive movements with $354 million in inflows, but consumer staples experienced outflows of about $571 million.

Money market funds continued to attract investors for the third consecutive week, with net inflows of about $53.75 billion.

Global bond funds broke a three-week streak of outflows, registering $6.73 billion in net purchases.

Reflecting improved risk appetite, high yield bond funds saw substantial inflows of around $6.43 billion, the biggest weekly gain since mid-June 2020.

Government bond funds also experienced net purchases of about $2.76 billion. In contrast, global short-term bond funds faced approximately $4.44 billion in outflows.

In the commodities sector, precious metal funds continued to attract interest, garnering $73 million in net purchases for a second consecutive week. Energy funds also maintained their appeal with $54 million in inflows, marking three weeks of consecutive gains.

Emerging market data, encompassing 29,633 funds, indicated a net sell-off of $1.73 billion in EM equity funds, extending a 13-week withdrawal streak. In contrast, EM bond funds received $592 million – their first weekly inflow in 15 weeks.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Andrew Heavens)