(Reuters) – Investors withdrew money from global equity funds in the week ended Oct. 30, amid caution ahead of Tuesday’s U.S. presidential election and the Federal Reserve’s policy decision later in the week.
Investors pulled a net $2.65 billion from global equity funds during the week, marking the first week of net sales since Sept. 25.
Ahead of Tuesday’s U.S. presidential election, Democratic candidate Kamala Harris and Republican candidate Donald Trump are virtually tied in opinion polls.
The U.S. equity market appears vulnerable in the near term, said Gary Dugan, chief executive officer at Global CIO Office.
While some investors argue that a Trump victory could be beneficial for equities due to hopes of greater economic growth stimulus, current market valuations are considerably higher than in 2016, the year before Trump took office for the first time.
By region, U.S. equity funds saw a net $5.83 billion of outflows, the biggest weekly net sales in five weeks. European funds saw net outflows of $1.46 billion, while Asian funds saw about $4 billion of net purchases.
Among sectoral funds, industrials, healthcare, and gold and precious metals recorded net sales of $552 million, $521 million and $434 million respectively. Consumer discretionary and utilities, meanwhile, saw a net $474 million and $363 million of inflows, respectively.
Investors put money into global bond funds for a 45th successive week, with purchases totaling a net $14.14 billion.
Dollar denominated medium-term bond funds attracted a net $2.91 billion, the seventh weekly inflow in a row. Government and corporate bond funds also attracted a net $2.76 billion and $2.39 billion, respectively.
Global money market funds, meanwhile, saw a net $11.73 billion of sales, partly reversing $26.22 billion of net inflows in the prior week.
In the commodities segment, gold and other precious metals funds were popular for the 12th straight week, with a net $213 million of purchases during the week. Energy funds also gained a net $123 million in inflows.
Data covering 29,670 emerging market funds showed that equity funds saw a weekly net outflow of $1.82 billion, following five weeks of inflows in a row. Investors also pulled a net $802 million out of emerging market bond funds.
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Mark Potter)
Equity funds are investment funds that primarily invest in stocks or shares of companies. They aim to provide capital growth over time and can be actively or passively managed.
A bond fund is a mutual fund or exchange-traded fund that invests in bonds. These funds provide investors with regular income and are generally considered less risky than equity funds.
Net inflows refer to the total amount of money invested in a fund minus the withdrawals. Conversely, net outflows indicate more money has been withdrawn than invested.
The Federal Reserve, often referred to as the Fed, is the central bank of the United States. It regulates the country's monetary policy and oversees the banking system.
Market valuation refers to the process of determining the current worth of an asset or company based on market conditions, including stock prices and economic indicators.
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