Global Equity Fund Inflows Decline Amid Geopolitical Tensions

Impact of Geopolitical Factors on Equity Funds

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Recent Trends in Equity Fund Investments

Jan 23 (Reuters) - Investments in global equity funds shrank in the week to January 21 as U.S. President Donald Trump's threats of reigniting a trade dispute with Europe over Greenland curbed investor appetite.

Bond Fund Performance and Trends

According to LSEG data, investors bought global equity funds worth a net $9.19 billion during the week - a marked decline from the previous week's $45.57 billion net purchases.

Sector-Specific Inflows and Outflows

Trump, however, stepped back from his tariff threats against eight European countries on Wednesday and ruled out seizing Greenland by force.

U.S. equity funds shrank by $5.26 billion as outflows partly reversed an inflow of $28.17 billion, received in the previous week.

Investors, meanwhile, purchased European and Asian equity funds of $10.22 billion and $3.89 billion, respectively in the most recent week.

"Strategically, we believe diversification across regions and asset classes is all the more important in a polarised world, where risks are higher and outcomes less predictable," said Mark Haefele, chief investment officer at UBS Global Wealth Management.

At an early stage of the fourth-quarter earnings season, LSEG data shows that global large- and mid-cap companies are expected to report earnings growth of 16.44% for the last quarter.

Among equity sectors, the financials and metals and mining sector funds were notable for inflows of $2.36 billion and $2 billion, respectively.

Investors, meanwhile, added a net $12.52 billion to bond funds, extending their recent buying streak into a third successive week.

They bought dollar-denominated medium-term bond funds of a net $2.14 billion and euro-denominated bond funds of approximately $1.6 billion.

Money market funds underwent a second successive weekly outflow, amounting to a net of $35.02 billion.

The gold and precious metals commodity funds segment drew $1.96 billion worth of weekly net investments, the 10th weekly inflow in 11 weeks.

In emerging markets, investors acquired equity funds of $7.6 billion, the largest amount for a week since October 2024. They also invested $1.42 billion into bond funds, data for a combined 28,718 funds showed.     

(Reporting by Gaurav Dogra; editing by Barbara Lewis)