(Reuters) – Global equity funds witnessed outflows in the week to Feb. 15, hit by worries about the U.S. Federal Reserve’s further monetary tightening, with recent data showing stickier-than-expected inflation.
Refinitiv Lipper data showed investors disposed of a net $1.85 billion worth of global equity funds last week, compared with net purchases of $379 million in the previous week.
Rate hike fears increased during the week as reports on consumer prices and retail sales pointed to stubborn inflation and a stronger economy despite higher borrowing costs.
Fund flows: Global equities, bonds and money market https://fingfx.thomsonreuters.com/gfx/mkt/egpbyarxgvq/Fund%20flows-%20Global%20equities%20bonds%20and%20money%20market.jpg
The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, hit a three-month high of 4.718 on Friday.
U.S. and Asian equity funds witnessed outflows of $3.5 billion and $310 million, respectively, but investors purchased European funds worth $1.5 billion.
Tech, healthcare, and consumer discretionary sectors suffered $624 million, $408 million and $319 million worth of outflows, respectively.
Meanwhile, weekly inflows into global bond funds slipped to a seven-week low of $2.62 billion.
Fund flows: Global equity sector funds https://fingfx.thomsonreuters.com/gfx/mkt/klpygdayypg/Fund%20flows-%20Global%20equity%20sector%20funds.jpg
Investors purchased global government and short- and medium-term bond funds worth $3.2 billion and $2.5 billion, respectively. But they offloaded $3.1 billion of high-yield bond funds, marking the biggest weekly selling since Dec. 21.
Meanwhile, global money market funds saw $13.3 billion worth of net selling, the biggest outflow in eight weeks.
Global bond fund flows in the week ended Feb 15 https://fingfx.thomsonreuters.com/gfx/mkt/xmpjkradzvr/Global%20bond%20fund%20flows%20in%20the%20week%20ended%20Feb%2015.jpg
Demand for commodity funds remained weak during the week as energy funds received just $34 million, the smallest amount in three weeks. Precious metal funds also got just $2 million.
Data for 23,637 emerging market (EM) funds showed that equity funds drew $1.92 billion in a sixth week of net buying, while bond funds faced outflows worth $1.44 billion after seven weekly purchases.
Fund flows: EM equities and bonds https://fingfx.thomsonreuters.com/gfx/mkt/zjpqjwrzrvx/Fund%20flows-%20EM%20equities%20and%20bonds.jpg
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru;Editing by Sharon Singleton)