Global Money Market Funds Attract Biggest Inflows in Nearly a Month
Weekly Fund Flows and Market Drivers
Money Market Funds See Significant Inflows
Sept 4 (Reuters) - Global money market funds attracted significant inflows in the week through September 2, as escalating U.S.-Iran tensions and a selloff in global bonds prompted investors to increase cash holdings and favour shorter-duration debt.
Investors added a net $46.1 billion to global money market funds, the biggest weekly inflow since August 5, according to LSEG Lipper data.
Geopolitical and Economic Factors
Escalating U.S.-Iran Tensions
The United States struck Iranian military targets near the Strait of Hormuz, while Tehran said it had targeted U.S. assets across the region. Brent crude climbed to a nearly 1-1/2-month high of $97.62 a barrel, adding to inflation concerns.
Rate Worries and Federal Reserve Comments
Rate worries also resurfaced after Federal Reserve Chair Kevin Warsh said last week that the central bank would "have work to do" if policymakers were not confident underlying inflation was returning to its 2% target.
Equity and Sectoral Fund Flows
Global Equity Fund Movements
Meanwhile, global equity funds attracted net inflows of $6.65 billion, more than reversing the previous week's $6.13 billion in outflows.
Investors poured a net $13.09 billion into European equity funds and $4.22 billion into Asian equity funds, while withdrawing roughly $11.12 billion from U.S. equity funds.
Sectoral Fund Outflows
Global sectoral funds recorded net outflows of $2.62 billion, as investors ended a two-week streak of inflows into technology funds with net sales of $856 million. Financial and industrial funds also saw significant outflows of $1.35 billion and $484 million, respectively.
Bond and Commodity Fund Trends
Bond Fund Inflows and Outflows
Weekly net inflows into global bond funds cooled to a five-week low of $10.01 billion, although short-term bond funds attracted $7.43 billion - their largest weekly inflow since July 8.
Loan participation funds also attracted $1.08 billion in inflows, while government and corporate bond funds recorded net outflows of $3.34 billion and $1.41 billion, respectively.
Commodity Fund Preferences
Among commodity funds, gold and other precious metals funds remained popular for an eighth straight week, attracting $2.85 billion in inflows. Energy funds, meanwhile, posted a third consecutive weekly outflow of $232 million.
Emerging Markets Activity
Equity and Bond Fund Inflows
In emerging markets, investors extended their equity fund buying streak to eight weeks, with net inflows of $1.99 billion. They also added $646 million to bond funds, according to data covering 28,994 funds.
Reporting and Data Sources
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy; Editing by Vijay Kishore)
