Global equity funds face outflows as Trump's tariff threat fuels caution

(Reuters) - Global equity funds saw their second weekly outflow in seven weeks by February 5, as investors became more cautious following U.S. President Donald Trump's announcement of steep tariffs on Mexico, Canada, and China.

However, the selling pressure eased after Trump postponed the tariffs on Canada and Mexico.

Investors sold a net $3.86 billion worth of global equity funds during the week, in contrast to a net $15.35 billion worth of purchases in the prior week, according to data compiled by LSEG Lipper.

Investors withdrew a net $10.71 billion from U.S. equity funds but allocated a net $4.86 billion to Asian funds and $1.88 billion to European funds.

Global equity sectoral funds, meanwhile, attracted about $2.9 billion worth of inflows on a net basis, posting a fifth successive weekly net purchase.

The financial and consumer discretionary sectors, both witnessed inflows for a fourth successive week to the tune of a noticeable $2 billion and $911 million, respectively.

Global bond funds remained popular for the sixth successive week, attracting a robust $17.74 billion on a net basis for the week.

Short-term bond funds stayed in demand for the 18th successive week as investors pumped $4.14 billion into these funds. Loan participation funds and high yield bond funds also drew inflows worth a remarkable $3.03 billion and $1.62 billion, respectively.

Investors, meanwhile, snapped up $75.4 billion worth of money market funds following a net $40.64 billion worth of sales in the week before.

Among commodity funds, precious metals funds saw a net $563 million in sales, marking their third successive weekly outflow. In contrast, energy funds gained a net $100 million in inflows.

Data covering 29,598 emerging market funds showed, investors divested equity funds for the 13th consecutive week to the tune of $600 million. They, however, racked up a net $1.85 billion worth of bond funds for the fifth successive week of net purchases.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Sherry Jacob-Phillips)