Investors Withdraw Billions from Equity Funds as Oil Prices Surge on Inflation Fears
Global Fund Flows and Market Reactions
Equity Funds Experience Major Outflows
Sept 11 (Reuters) - Global equity funds recorded significant outflows in the week through September 9, as a surge in oil prices amid the U.S.-Iran war heightened concerns about inflation and rising borrowing costs.
LSEG Lipper data showed that global equity funds recorded net outflows of $15.52 billion during the week, the largest since March 18, driven by net sales of $32.27 billion in U.S. equity funds.
Regional Equity Fund Trends
European and Asian equity funds, however, recorded net inflows of $11.16 billion and $3.03 billion, respectively.
Oil Prices and Inflation Concerns
Brent crude hit a four-month high of $109.97 a barrel on Friday, after surpassing the key $100 threshold on Wednesday, fueling concerns that inflation would remain elevated and prompt major central banks to raise interest rates.
U.S. Inflation Data and Rate Hike Expectations
The U.S. producer price report released on Thursday, ahead of Friday's consumer price data, indicated that inflation remained firm in August, strengthening expectations of a rate hike by the Federal Reserve next week.
Sectoral and Bond Fund Movements
Sectoral Fund Inflows
Sectoral funds, meanwhile, attracted net inflows of $2.92 billion, led by net purchases of $1.89 billion in technology and $1.25 billion in financials.
Bond Fund Trends
Global bond funds attracted $8.95 billion, the smallest amount for a week since July 29.
Short-Term and Specialized Bond Fund Activity
Short-term bond funds attracted $6.65 billion, their second-largest weekly inflow in three months. Investors also bought $1.01 billion in loan participation funds and $743 million in government bond funds, while selling $2.37 billion in corporate bond funds.
Money Market Fund Activity
Investors added money market funds of $10.72 billion in their second consecutive weekly purchase.
Commodity and Emerging Market Fund Flows
Commodity Fund Movements
In commodity funds, gold and precious metals funds recorded net sales of $537 million after eight consecutive weeks of inflows. Energy, however, attracted $211 million.
Emerging Market Trends
In emerging markets, investors ended an eight-week streak of net purchases, posting net sales of $1.56 billion. Bond funds recorded a sixth consecutive weekly inflow of $537 million, data covering 28,984 funds showed.
(Reporting by Gaurav Dogra; Editing by Shilpi Majumdar)