Global Equity Fund Investors Halt Buying Streak Amid Rising Bond Yields
Weekly Fund Flows and Market Reactions
Equity Fund Outflows Break Streak
May 22 (Reuters) - Global equity funds recorded the first weekly outflow in nine weeks in the week through May 20, as investors turned cautious over inflation and a rise in long-term borrowing costs to nearly two-decade highs.
According to LSEG Lipper data, investors liquidated a net $6.13 billion of global equity funds during the week, logging their first weekly net sales since mid-March, when they had withdrawn a net $21.87 billion.
Impact of Rising Bond Yields
The 30-year U.S. Treasury yield climbed to 5.201% on Wednesday, its highest since 2007, as uncertainty around a possible resolution to the Middle East conflict raised concerns over energy prices and inflation. It last traded at 5.0795%.
Regional Fund Flows
U.S. equity funds suffered the second weekly outflow in three weeks, to the tune of $12.05 billion. Asian funds also recorded net outflows of $570 million, though European funds attracted a net $4.62 billion in inflows.
Sector and Asset Class Trends
Technology and Other Sector Funds
Technology sector funds were popular for a seventh successive week, with net inflows of $6.94 billion. Financials and industrials, however, had weekly outflows of $2.8 billion and $1.3 billion, respectively.
Bond Fund Inflows Continue
Investors, meanwhile, bought a net $21.89 billion of global bond funds as they extended the recent buying streak into a seventh successive week.
Short-Term and Government Bond Fund Activity
Short-term bond funds, government bond funds and euro-denominated bond funds witnessed significant weekly net purchases of $7.47 billion, $3.09 billion and $1.68 billion, respectively.
Money Market and Commodity Funds
Money market funds recorded a lighter $1.06 billion weekly net inflow, after a net outflow of $10.41 billion the prior week.
Gold and precious metals commodity funds saw a net $2.34 billion of weekly inflows, remaining popular for a second straight week.
Emerging Markets Overview
In emerging markets, investors shed a net $2.95 billion of equity funds, resulting in a fourth straight week of outflows. They also withdrew $256 million from bond funds after a run of six weekly purchases, combined data for 28,926 funds showed.
(Reporting by Gaurav Dogra; Editing by Jonathan Ananda)
