Global equity funds snap three-week inflow streak

Market Overview and Trends

Jan 9 (Reuters) - Global equity funds recorded their first weekly outflow in three weeks in the week through January 7 as investors trimmed risk on geopolitical concerns, U.S. rate uncertainty and stretched valuations, especially in U.S. stocks.

Investor Reactions to Economic Factors

LSEG Lipper data showed that global investors withdrew a net $6.07 billion from equity funds, the first weekly net outflow since December 17, driven largely by massive sales in U.S. equity funds.

Performance of Various Fund Types

Investors are wary as the Federal Reserve balances a softening labour market against still-elevated inflation, signalling after last month’s rate cut that borrowing costs are unlikely to fall further in the near term.

Equity Funds

Concerns over elevated valuations continued to weigh on some technology stocks, further dampening investor sentiment. Nvidia is down about 2.0% so far this week, while Broadcom has fallen roughly 4.4%.

Bond and Money Market Funds

Investors, meanwhile, pumped $11.98 billion into European equity funds, the biggest amount for a week since May 2025. Asian funds also saw a net $4.52 billion net purchase.

Gold and Precious Metals Funds

Money market funds witnessed $161.27 billion worth of weekly net purchase, the largest for a week since December 2024.

Bond funds attracted $17 billion during the week after a marginal $865 million outflow, a week ago.

Short-term bond funds received $4.77 billion, broadly recovering a net $4.89 billion outflow in the prior week. Corporate and Euro denominated bond funds also saw $1.5 billion and $1.33 billion worth of net purchases, respectively.

“While lower rates may mean income opportunities are becoming scarce, quality bonds should continue to play an important role as a source of yield and diversification, among other strategies to boost income,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

Gold and precious metals commodity funds recorded a modest weekly outflow of $268 million, ending an eight-week streak of net inflows.

Data covering 28,606 emerging market funds showed that investors poured $3.16 billion into equity funds, the most in six weeks, and added a further $1.1 billion to bond funds.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Toby Chopra)