Global equity funds experienced their second consecutive week of outflows through September 11, as investors remained wary about the state of the U.S. economy and the political uncertainty leading up to the presidential debates. However, expectations of potential central bank rate cuts helped temper the pace of withdrawals.
Data from LSEG revealed that global equity fund outflows reached $3.46 billion during the week, which marked a decrease from the $4.96 billion seen the previous week.
The U.S. economic slowdown triggered the sell-off in global equities last week, but world stocks made a notable comeback this week, rising by more than 2%, spurred by the European Central Bank’s rate cut and hopes for a similar move by the U.S. Federal Reserve in the upcoming meeting.
In the U.S., investors pulled $7.82 billion from equity funds, following $11.54 billion in outflows the week prior. Meanwhile, Asian and European funds saw positive inflows of $2.91 billion and $793 million, respectively.
Ajay Rajadhyaksha, head of global research at Barclays, noted in a statement that while equities are favored over fixed income amid global rate cuts and low unemployment, many investors are likely adopting a cautious stance until more clarity is available after the U.S. election.
Sector-wise, technology funds saw the largest outflow of $1.97 billion, the highest since November 2023. Financials also experienced withdrawals totaling $1.53 billion, while consumer staples and utilities attracted $1.12 billion and $878 million in inflows, respectively.
Despite these outflows, the Dow, S&P 500, and Nasdaq all posted gains during the week, with the indexes climbing nearly 0.75%, 0.5%, and 0.6%, respectively.
Safer investments continued to appeal to investors, as $21.67 billion flowed into money market funds and $4.14 billion into government bond funds. Global bond funds attracted $11.81 billion for the 38th consecutive week, with $3.12 billion going into short-term funds and $1.5 billion into high-yield funds.
Precious metal funds, including gold, maintained their popularity with $472 million in net inflows for the fifth week running. Energy funds also saw a modest inflow of $150 million.
Emerging market equity funds continued their 14-week streak of outflows, losing $1.05 billion, while bond funds saw a $567 million inflow, marking the 12th consecutive week of gains.